








Mr. C liairman and, Gentlemen : ' 

By your courtesy I am here to present briefly my 
views as to the probable result of proposed railroad leg- 
islation by the Legislature of Texas. I have not yet been 
able to procure copies of the various bills, to ascertain 
their detailed provisions and can only rely on the gen- 
eral reports published from day to day through the 
press, and content myself with a discussion of the gen- 
eral principles involved in the contention between the 
Legislators and the owners of railroad properties. 

When before your predecessors on former occasions, 
I said all that could then be said by me on these subjects 
and must very largely repeat myself on this occasion, 
especially as my time is limited and what I have hereto- 
fore said need not be much enlarged on. 

The interest I have the honor to represent is the only 
one of magnitude and usefulness in your State that is not 
directly represented on the floor of the two houses of your 
Legislature. The agricultural, mechanical and commer- 
cial interests, as well as the leading professions, are ably 
represented on the floor of both Houses. This is deemed 
eminently proper by each and every other class, and is 
of itself free of criticism, yet, none of these interests nor 
all of them combined are so bitterly assailed as the 
land carrier lines of your State, involving an invest- 
ent of nearly half of your aggregate wealth. This in- 
stment too, has come from abroad — I might say, en- 
tirely from abroad — at your invitation and upon your 
solomn promises, repeated through all the channels of 
intelligence and by every department of the State Gov- 
ernment, of absolute protection from unfriendliness or 
hostility. Notwithstanding this fact, scores of bills have 
been introduced, and are now being considered, looking 
directly to impairing both the value and usefulness of 


S- 

N 


[ 2 ] 


these enterprises. Yet, when its representatives appear 
before you, in your assembled or in your individual ca- 
pacity, to remonstrate against ill-advised and ill-consid- 
ered legislation, a hue and a cry goes up that the “rail- 
road lobby is here,” endeavoring to influence the Legis- 
lature. We have no means of being heard within the 
bar of the House or within the precincts of the Sen- 
ate Chamber, and our only method of communication 
with the Legislature is by the courtesy of Committees. 
The railroad companies of Texas, notwithstanding the 
immense interests involved, are asking absolute^ nothing 
at the hands of the Legislature except to be let alone by 
the potential power you wield. We are already crippled 
in revenue by legislation which impairs our legitimate 
net revenue, applicable to interest charges (to say noth- 
ing of dividends) never contemplated, by those who 
granted the franchises to the older roads, authorized 
prior to the Constitution of 1876. Our passenger rates 
have been cut down from charter rates of five and six 
cents per capita per mile, to three cents per capita per 
mile, and a limit has been fixed to freight charges which 
was not contemplated in the earlier charters granted to 
the first roads built in the State and which are in them- 
selves, as to the new properties, wholly unremuner- 
ative ; but we have preferred to submit uncomplainingly 
to those unjust restrictions placed upon what may be 
considered our charter rights, hoping that no further en- 
croachments would be made upon the privileges origi- 
nally guaranteed to us. We are here as representatives 
of the railroad interests of Texas. We are tax payers ; 
we are citizens of your commonwealth ; we have a right 
to be heard before the representatives of the people be- 
cause they are our representatives and we shall ask or 
demand of the Legislature nothing more and nothing 
less than what are our rights as tax-payers and citi- 
zens : That much we do ask— we shall continue to de- 


[ 3 ] 


mand — for the point has now been reached where our self- 
existence is at stake. The properties I have the honor 
to especially represent comprise 1200 miles of railway in 
your State, which have never earned money enough from 
the carrying business and from all other sources to pay 
one dollar dividend to the stockholders, and during the 
live years last past, (as shown by the sworn statements 
of its officers, who I undertake to say are as honorable as 
the officers of the State government and as truthful as you 
or anyone else,) the earnings have fallen short of paying 
interest upon the investment, many millions of dollars. 
In the face of this, gentlemen of both Houses introduce 
bills and earnestly advocate their passage, the direct re- 
sult of which would be to still further reduce the income 
of these properties. Among the list of railroad lines to 
be affected will be found some which have had long and 
doubtful struggles with poverty and financial disasters. 
Until now their final success seems reasonably assured, 
unless overtaken by calamities undeserved or unexpected 

It would seem that the history of these corporations, 
or the experience of those interested in and identified 
with them through their days of gloom to partial suc- 
cess, should furnish information most valuable to the leg- 
islator in the exercise of an enlightened judgment, when 
framing laws which must shape the destinies of these 
great corporations for years to come. We do not arro- 
gate to ourselves superior wisdom. We only claim that 
our large experience in a business which is most difficult 
and complex, entitle our views to careful consideration 
so far as you believe they are based upon honest convic- 
tions. Speaking for myself, the best assurance I can 
offer of my purpose to state unvarnished facts, is the 
pledge that I stand ready to verify by undoubted evi- 
dence every statement I shall make in your presence. 

I maintain that the Legislature of Texas cannot, by 
any restrictive legislation, diminish the income of rail- 


[4] 


roads in Texas, and especially those organized prior to 
the adoption of the Constitution of 1876, except in con- 
formity to the act of February 7th, 1858, entitled An Act 
to Regulate Railroads , which Act became, so to speak, 
a part of the charter of all the railroads in Texas in ex- 
istence prior to the adoption of the present constitution, 
which have brought themselves within the plain and 
obvious conditions of the first section of the act. Let 
us briefly consider the 

ACT OF FEBRUARY 7th, 5 1858. 

Can the Legislature pass any law which is in con- 
flict with the guarantees and provisions of the act of 
February 7th , 1853 , which can become effective as against 
corporations in existence , either by special or general 
charter , prior to the adoption of the present Constitution 
of the State of Texas f 

This question involves an inquiry too wide, and 
more comprehensive, than time will now permit for its 
full discussion; but the salient points, with a summary of 
the argument, may be presented. 

The act of February 7th, 1853, was in force, at least 
until the adoption of the present Constitution. The ques- 
tion therefore is, can the Legislature of Texas, notwith- 
standing the provisions of the present Constitution, pass 
any general law upon the subject of rates, applicable to 
such lines of railway as are clearly embraced in the pro- 
visions of the Act, unless in harmony with sections one 
and fifteen of that Act, as complied in Paschal’s Digest 
Arts. 4885-4899) as follows : — 

“Sec. 1. All railroad companies which have been 
heretofore incorporated, or which shall hereafter be in- 
corporated, or relieved from the performance of any act 
required of them, or which shall accept of any donation 
or loan from this State, or which shall accept of the sub- 
scription of any county of this State, shall have all the 


[ 5 ] 


powers and privileges, and be subject to all the duties, 
liabilities and provisions contained in this Act.” 

“Sec. 15. It shall be lawful for the Legislature, at 
any time, to prescribe the rate to be charged for the 
transportation of persons and property upon any such 
road, should they be deemed too high; and may exercise 
the same power every ten years: Provided, That no 
reduction shall be made unless the net profits of the 
company for the previous ten years (the expen- 
ditures of the company being bona fide , and not 
with a view to defeat the operation of this section) 
shall amount to a sum equal to 12 per cent, per annum 
upon its capital stock, and then so as not to reduce the 
future probable profits below the said per annum.” 

All the railroads of Texas have been constructed 
since the passage of that Act and I think it will be con- 
ceded that not one of them is earning 12 per centum per 
annum upon its capital stock. Of these, notable mention 
may be made of the Houston & Texas Central Railway, 
the International & Great Northern, the Galveston, 
Harrisburg & San Antonio, the Galveston, Houston & 
Henderson, the Texas & New Orleans, the Gulf, Colorado 
& Santa Fe, and the Texas & Pacific Railway. The lines 
above enumerated were all chartered by legislation 
antedating the adoption of the Constitution of 1876, and 
were under the influence of the Act of 1853, and, in one 
way or another, accepted its provisions. The Texas & 
Pacific, Houston & Texas Central, the Galveston, Harris- 
burg & San Antonio, the International & Great Northern 
and perhaps all the other lines above named — and maybe 
others in the State — had received and accepted their 
franchises, and constructed (some of them entirely and 
others partially) their lines, before the adoption of the 
Constitution of 1876, and all of them had accepted loans 
and donations from the State and subscriptions from the 


[ 6 ] 


counties and some of them had been relieved of the per- 
formance of acts required of them. 

The first section of the act makes it apply to all 
railroad companies, which before that time were incor- 
porated, or “ after that time shall be incorporated ,” or 
“ relieved of the performance of any act required of 
them,” and which shall accept of any donation, or loan 
from the State, or which shall accept of any subscrip- 
tion from any county in the State. All such shall have 
all the powers , and privileges, and be subject to all the 
duties, liabilities and provisions contained in the act. 
But in the 15th Section, the assumption and declaration 
of power to prescribe the rates to be charged, is coupled 
with the condition, that no reduction in rates shall be 
made, unless the net profits of the company, for the pre- 
vious ten years (meaning of course, the ten years previ- 
ous to the proposed reduction), shall amount to a sum 
equal to 12 per centum upon its capital stock, and then 
the reduction of rates shall be such as not to reduce the 
profits below 12 per centum per annum. 

Now if the State has permitted this statute to remain 
unrepealed, and the stockholders of these railroad com- 
panies, with this statute as a part of the contract, have 
invested their money, can it be maintained that the 
State can, without literally complying with the terms of 
the contract, diminish the rates to be charged by rail- 
roads, either for passengers or on freights ? 

If this general law conferred such vested rights upon 
the railroads of the State as to preclude the Legislature 
from interfering with the rates, except in cases where 
the profits equaled, for the ten years previous, 12 per 
centum per annum on the capital stock, the State, 
through its Legislature or otherwise, can only interfere 
with rates after first ascertaining that the earnings are 
equal to the standard prescribed in the act of 1853. It 
can not be said that any railroad company waived such 


rights as it may have had under the act of 1853 by sub- 
mitting to the rule of rates prescribed in the act 1879. 
This was the tirst general act prescribing rates, by the 
Legislature of Texas. And although the rates are prob- 
ably lower than they would have been had the act of 
1853 been applied to the proportion of earnings to 
expenses, as the measure of profits to which the corpora- 
tions are entitled, yet the legislation has been submitted 
to as the standard of rates, which was continued for a 
term of ten years. At that time none of the railroad 
companies in the State contemplated the speedy approach 
of a period when the condition of financial centres would 
justify them pushing unfinished lines to completion, in 
advance of population and business, under a delusive 
hope that a rush from the overcrowded centers of popu- 
lations in the Eastern States and Europe would over- 
take the track-layers and very speedily furnish remuner- 
ative business to the daring ventures. They were too san- 
guine. Many millions of money were hurried into these 
schemes, as the financial mist cleared under the rebound 
of 1869 and 1880, which have yielded no profit to the in- 
vestor, but their mistake has enriched your State and 
your people and made your school fund a marvel to the 
other States. 

It may be conceded that the act of 1853, so far as in- 
consistent with the provisions of the Consti- 
tution of 1876, was repealed by the adop- 
tion of the latter, and yet not affect rights which 
had previously become vested under or guaranteed by 
it, or which were expressly reserved by its terms. But 
its repeal could not impair or disturb rights, if any 
vested or were guaranteed under its provisions. But to 
save all questions in a highly technical tribunal, and as 
if to preclude doubt or controversy, the framers of your 
Constitution, tenderly conscientious of depriving any 
person of liberty or property, bottomed on either vested 


[ 8 ] 


or guaranteed rights, wisely provided against the dives- 
ture of such rights as might have attached, or were 
guaranteed under any grant or statute of the State. 

The provisions relating particularly to the subject, 
are as follows : — 

Article 12. 

“Section 3. The right to authorize and regulate 
freights, tolls, wharfage, or fares levied and collected, or 
proposed to be levied and collected bv individuals, com- 
panies, or corporations, for the use of highways, land- 
ings, wharves, bridges and ferries devoted to public use, 
has never been and shall never be relinquished or aban- 
doned by the State, but shall always be under legisla- 
tive control, and depend upon legislative authority.” 

“ Section 7. Nothing in this article shall be con 
strued to divest or affect rights guaranteedby any exist- 
ing grant or statute of this State, or of the Republic of 
Texas.” 

I believe, and think it can be maintained by author- 
ity, that the railroad companies, which were clearly un- 
der the influence of the act of the 7th of February, 1853, 
and accepted the same by any of the means prescribed 
therein, then and thereby completed a contract with the 
State, as to all parts of the act, as inviolable as would 
have been amendments to their charters, accepted by the 
unanimous act of their stockholders in the most solemn 
manner. The act itself was a public statue, adopted be- 
fore the State had fairly inaugurated its railroad enter- 
prises. The repeal of its 17th section, by the act of 
the 26th of January, 1860, was evidently done in the 
interests of the railroads of the State. The State could 
have had no possible motive in expunging that section 
from the statue books, except in so far as its repeal 
would encourage the building of railways. The provis- 
ions of that section gave the State a mere privilege, 
which it could exercise or not, at its discretion, and inde- 


[9] 


pendent of the railroads. That is to say, the State could, 
by its own volition, purchase any railroad which might 
be built within its borders, under the 17th section of the 
act of 1853, by paying for it according to the letter of 
the statue. It is not difficult to perceive that this right 
of the State, existing in full force, might deter capital 
from embarking in railroad enterprises in Texas. Be- 
fore its repeal no railroad companies could have resisted 
the right of the State to purchase, according to the terms 
of that section and no doubt the law makers, at that 
time, perceiving the injurious influence of that section, 
in preventing capital from embarking in railroad build- 
ing, repealed it in the interest of the State. The repeal 
itself shows that the act of 1853 was recognized, both by 
the State and the railway companies, as being in full 
force, and that the lines of railway then being constructed 
were being built with reference to that act as a part of 
their franchises. It also shows the concurrent legislative 
construction of the act, as of the same force and effect as 
if engrafted upon the charters of the railway companies. 
If not, why should the State have denied itself this 
power by this repealing clause ? It is not difficult to 
perceive the reasons which actuated the Legislature, at 
that early day, in the passage of the act of February 7, 
1853, which is styled in its very title, “ An act to regulate 
railroads.” 


THE OBJECT OF THE ACT OF 1853, 

is most obvious. All the railway companies then in ex- 
istence had a vested right by their charters to fix maxi- 
mum rates of freight and passenger fares. The majority 
of them were limited to 50 cents per 100 pounds per 100 
miles for freight and to 5 cents per mile for passengers. 

These rates were arbitrary, and railroad construction 
in Texas was speculative, and such enterprises, to a great 
extent experimental. No one was wise enough, at that 


[ 10 ] 


early day, to determine whether, on the one hand, the 
exercise of these vested charter rights, during the legal 
lives of the corporations, would be oppressive upon the 
public, or, on the other hand, whether the limit fixed 
would, in a new country, allow the railroad companies to 
be self-sustaining. Then and ever since the laws of the 
State of Texas have permitted a conventional rate of 
interest at 12 per cent, per annum. The Legislature 
adopted a rational and wise method in prescribing these 
rules by which railroads should be governed. In fixing 
their tariff rates, one of the considerations passing to the 
State, from the companies then organized, was the sur- 
render of their charter right to fix an arbitrary maxi- 
mum rate. 

The Act intended to offer the inducement — and a 
very great one it was — that the capital thus invested 
should not be at the arbitrary will of the State until its 
net profits should equal the maximum of the conven- 
tional rate of interest on money. As the respective com- 
panies accepted the terms and provisions of the act of 
1853, they completed a contract with the State, that could 
not afterwards be disturbed by the State, either by its 
organic law, or by legislative enactment. 

The State had the right to fix the rate, but it is an 
historical fact that, neither before the act of 1879, fixing 
the rates — nor, indeed, now, had or has any railway in the 
State a net earning of 12 per cent, per annum upon the 
actual cost of its property or of the capital stock. The 
State made the offer of a contract with the railway com- 
panies, and the railway companies accepted the offer, 
and it was discretionary with the State to legislate or 
not, in its wisdom, upon the question of rates within the 
limits fixed by the fifteenth section of the act. 

The extrinsic evidence of the purposes and objects 
of the act of February 7th, 1853, shed no little light upon 
this subject. Several of the then existing railroad 


[ 11 ] 


charters conferred the right upon the companies to 
charge a maximum rate of live cents per mile for passen- 
gers, and fifty cents per one hundred pounds per one 
hundred miles for freight. This was notably true of the 
Houston & Texas Central Railroad Company, the 
Buffalo Bayou Railway Company, the Colorado Rail- 
road Company, the Western Railroad Company (after- 
wards called the Southern Pacific Railroad Company), 
and perhaps others. 

In the early history of the roads, through sparse 
populations, and reaching no commercial points of any 
importance, the rate might be so low as to drive the 
infant companies into bankruptcy, while years after- 
wards, as populations became dense, towns and cities 
sprung up, and the agricultural, pastoral, mineral, 
commercial and manufacturing wealth of the country 
became fully developed, these rates might bring revenue 
into the treasuries of the companies, entirely out of pro- 
portion to the capital invested ; hence it was, that in its 
wisdom, the Legislature sought to devise a plan that 
would be just alike to the capital then being invited 
into the State, and to the people who were for all time 
thereafter to be the patrons of these great highways of 
commerce. The primary object of the act, then, was to 
pass a general law, fixing a flexible and just rule for the 
adjustment of rates, and inducing the railway companies 
whose charters gave them the arbitrary power to fix 
maximum rates, to yield that right and accept the pro- 
visions of the act of 1853, in the nature of an amend- 
ment to their charters ; and at the same time to bring 
under the influence of the act and subject to precisely 
the same conditions, other railway companies that 
might come into existence under the subsequent legisla- 
tion of the State. If the act of 1853 failed to accomplish 
this primary object, then a number of your railway cor- 
porations, embracing some of the oldest in the State, 


[ 12 ] 

have still the arbitrary power contained in their respec- 
tive charters. 

1 do not maintain that the act of 1853 was not 
repealable. It was as much the subject of repeal by sub- 
sequent Legislatures, as any other general law. It was 
as clearly the subject of repeal as the general incorpor- 
ated act, now on your statute books ; yet as to the latter, 
no member of the legal profession will maintain that if 
the general corporation law were now repealed, it would 
divest any right that had been taken under its pro- 
visions by the corporation, whether railroad or not, 
which had organized under it, and was proceeding in 
the exercise of the franchises conferred by virtue of the 
acceptance of the general corporation act. The act of 
1853 was repealable by any subsequent Legislature ; but 
as a fact its first and fifteenth sections were not repealed 
until your State had nearly 3000 miles of railway, con- 
structed. 

THE ACCEPTANCE OF THE ACT WAS A CONTRACT. 

The act itself was a proposition of the State through 
the Legislature ; and in so far as it was accepted before 
its repeal by any railroad company, it became a contract 
between the State and such railroad company. 

That the State can make a contract will not be denied. 
That it can do so only under some authority conferred 
by the constitution, or by statute, is equally incontro- 
vertable. If, by its statute, passed by the Legislature, in 
pursuance of express or implied powers of the constitu- 
tion, it offers to any particular person or corporation, to 
make a contract and the person or corporation accepts 
it, in the manner prescribed by the statute, it is then 
certainly the best defined and only mode by which the 
State can make a contract ; and I am not 
aware of any other means by which a State can 


[13] 


make a contract with a natural person or with a cor- 
poration, In what consists the difference in the making 
of a contract through the provisions of the act of 1853, 
and through the medium of the general act of incorpora- 
tion ? All concede that a corporation takes rights as 
high and as inviolate, when it organizes under a general 
law, to the full extent and limit of the provisions of that 
general incorporation law, as if its charter were granted 
in specific terms by an authorized Legislature. And it 
is equally true that if immediately thereafter, the gen- 
eral incorporation act is repealed, its effect is not to 
impair or divest any of the rights and franchises con- 
ferred upon the corporation breathed into existence 
during its continuance, but only to prevent ‘new com- 
panies from being formed and organized under its pro- 
visions. Its repeal does not impair the life of a corpora 
tion begotten by it, but it simply prevents the birth of 
any other corporations under, or by virture of, the act. 

The language is : “All railroad companies which 
have been heretofore incorporated, or which shall be 
hereafter incorporated,” etc. All were alike to be en- 
titled to “all the powers and privileges,” and to be 
subject to all the duties, liabilities and provisions, con- 
tained in the act. The entire substance and equity of 
the contract is found in the terms of the agreement with 
the railroad companies which were then in ex- 
istence or should thereafter be chartered to build 
roads ; that in consideration of such investment 
their rates should not be so reduced as to 
prevent them from realizing a profit of twelve per cent. 
That a contract could spring out of a law thus making a 
promise to the companies in question, could scarcely be 
more forcible in its recognition of the obligation of the 
vested right. When the State said by that act “it shall 
be lawful” to make reductions in a certain ratio, or by 
certain rules — if by thus declaring, it was made lawful 


[14] 


to make reductions, and make them only by those certain 
specific rules, it would be unlawful to reduce rates other- 
wise than as prescribed. The great consideration of the 
whole question, as it seems to us is, that it was intended 
that all existing, as well as all future companies, should 
have all the guarantees and obligations of law, accord- 
ing to the solemn forms of legislative enactment, in 
order to induce railroad construction, and that the Leg- 
islature should not possess the right, and would not 
attempt to exercise the right, of reducing rates below a 
point enabling the companies to realize a specified per 
cent, on their capital. But at the same time, the State 
reserves to itself the right whenever, from any considera- 
tion of public interests, it saw fit to exercise it, to be- 
come the owner of the railroad property by paying the 
cost thereof, and twelve per cent, per annum interest, 
with specified reductions. 

To strengthen the argument already advanced, sup- 
pose that a company, before the repeal of the 17th sec- 
tion of the act, had constructed one hundred miles of its 
road, and the State had determined to become its owner, 
and actually demanded that the railway company should 
sell its property in pursuance of and in accordance to 
the terms of the 17th section of the act of 1853, and had 
actually tendered the money and brought suit for the 
surrender of the property and franchises of the company; 
could the company have resisted the demands of the 
State? I think it will be conceded that the company 
could not resist such a demand, and for the reason that 
the 17th section was a contract between the company 
and the State securing the right to the State to purchase 
at its option and only at its option, but which right was 
surrendered by its own repeal of that section. Decided 
by this illustration, it will be seen that this section 
would, in the case supposed, be more than a legislative 
law, which could not be disregarded by the company. If 


[15] 


this be true of the 17th section, it must be equally true 
in illustrating the rights of railway companies as against 
the State, through the action of the 1st and 15th sections. 
It can not be said of the 17th section, when in force, that 
it was a contract which the State could enforce, and that 
the 15th section was not such a contract as the railway 
companies could enforce against the State. 

Suppose, while the act of 1858 was in full force, and 
while, under your original law, the Legislature had the 
right to grant special charters, the Legislature in charter- 
ing a named company had inserted in the charter, a 
clause as follows : “ Be it further enacted, That this 

company shall be entitled to all the rights, privileges 
and benefits, and subject to all the duties and obliga- 
tions of section 1 and 15 of the act passed by the Legis- 
lature of Texas on the 7tli day of February, 1853, enti- 
tled, £ An act to regulate railroads,’ ” would any enlight- 
ened court hold that those two sections did not become 
as much a part of the charter as if re-enacted in hcec 
xerba in the charter? The Supreme Court of the United 
States, in the case in 16th Wallace , page 244, declared 
such an act valid and binding, even to an extent of a 
provision therein referred to, exempting the property of 
the railroad company from taxation. 

The entire internal improvement system of some of 
your sister States is based on that character of legisla- 
tion, by which charter powers were conferred by refer- 
ence to other charters, or parts of general laws. 

Is not our proposition bottomed on the same, or fully 
as sound reasoning? Here is an act declaring what every 
railroad company shall be entitled to, and what shall be 
required of it, and it comes into existence under that 
declaration and gurantee, and accepts the terms. It sees 
and realizes that the State has declared by statute, and 
still declares by an unrepealed statute, that “ all rail- 
road companies heretofore or hereafter incorporated 


[16] 


shall,” etc. It belongs to that class, accepts the fran- 
chises of the State, and invests its capital in the creation 
of immovable 'properly under the solemn and continuous 
statutory guaranty of the State, that the earning capac- 
ity of that property shall not be impaired until a de- 
clared standard of profit can be realized. 

If I am right in assuming that the acceptance of this 
general law by any company was a contract, another im- 
portant question arises as to whether this contract was 
impaired by the adoption of the constitution of 1876? 
Certainly the act itself, as to any future right that might 
be acquired under it, so far as the Constitution of 1876 is 
inconsistent with it, must fall; but, so far as vested 
rights were taken under it, the subsequent Constitutional 
Convention could not, even though so intended by its 
delegates, divest this right. But, fortunately for us, it is 
not necessary to argue that question, because the 7th 
section of article 12 of the Constitution of 1876 express- 
ly declares : “ Nothing in this article shall be construed 

to divest or affect the rights guaranteed by any existing 
grant or statute of this State, or of the Republic of 
Texas.” 

Now whether this be a vested right or not, it is a 
right “ guaranteed ” by the State of Texas, by a statute 
in full force and vigor ; and whether the rights acquired 
by a railroad company under that statute rise to the 
dignity of vested rights in the legal and technical sense 
of the term, still, they were u rights guaranteed by a 
statute of the State.” 

EQUITY AND JUSTICE. 

The view I have taken of the effect and consequences 
to railroads and to the State, of the provisions of the act 
of 1853, are consistent with the soundest rules of equity 
and justice. The State, neither through its Legislature 
nor otherwise, has the right to confiscate the property of 


[17] 


natural or artificial persons, so long at least as that prop- 
erty is held under the sanction of law. Those railroads, 
each and every one of them, were constructed by capital 
which came into Texas at the invitation of the State. 
The State granted the railroad companies certain rights 
and privileges as an inducement to the investment of 
capital within her territory. Independent of the act of 
1858, and independent of any immunity contained in the 
charters of the railway companies against unjust and 
oppressive legislation, can the State by a reduction of 
the rates or otherwise, so impair the capital of these in- 
corporations as to leave them without a fair return upon 
their investment? There is not a fair minded man in the 
State who will say that the Legislature should exercise, 
even if it possesses, such power. And is that not an- 
other form of expressing the true intent and meaning of 
the act of 1858? Was not that act inspired by the very 
principle stated? While there might be a controversy 
as to the amount of profit that capital invested in rail- 
roads should be permitted to earn, yet it is conceded 
that they are entitled to a reasonable return, at least 
equal to that earned by capital embarked in other law- 
ful and industrial enterprises. 

The proposition is too clear for argument, that the 
companies whose charters give absolute power to fix 
rates to a specified maximum, if they surrendered these 
rights, in reference to the provisions of the act of 1853, 
acquired all new rights prescribed under the same act as 
inviolate as a charter right. 

It was the part of wisdom to make the same pro- 
vision applicable to all roads. Motives of public policy 
prompted it, and this if nothing else should sustain the 
act, else you could adopt no uniform legislation as to the 
rates on these great transportation lines. 

The charter of one of the great lines of your State 
provides ; “ The State expressly reserves the right to 


[ 18 ] 


regulate the rates of freight and passage upon said rail- 
road, making no distinction between said railroad and 
any other in the State.” This company received and ac- 
cepted its provisions in 1870, and took State and county 
subsidies. How could the Legislature make a rule appli- 
cable to this company which could not apply equally to 
those companies which had absolute charter rights to af- 
fix maximum rates, but who surrendered them in defer- 
ence to the act of 1853 ? 

The charter of another company whose lines reach 
your chief commercial centers, contains this pro- 
vision : 

“ The said company in its charge for freight and 
passengers shall be governed by the general railroad 
laws.” 

This company was incorporated in 1866, while the 
act of 1853 was in full force, and completed its line before 
the Constitution was adopted. t also took State and 
county subsidies, and thereby clearly brought itself 
within the powers of that law. 

The wisdom of the framers of the law in question, 
therefore, becomes most manifest in applying its provis- 
ions to all railroads. 

The just determination of the question whether the 
railroad companies in existence in the State, at the date 
of the passage of the act of February 7, 1853, or which 
sprung into existence after the passage of that act, and be 
fore the adoption of the Constitution, and which were either 
relieved of disabilities or took subsidies or accepted loans 
from the State, or took subsidies from the counties, are 
entitled to all the benefits and privileges, and burdened 
with all obligations of sections one and fifteen of that 
act, does not necessarily involve the question whether a 
corporation can take a vested right under a general law ; 
or rather the abstract question of the technical vesture of 
right might be waived. Concede, as all must do, that 


[19] 


the act of 1853 remained in fall force until the adoption 
of the Constitution of 1876, it must, also, be conceded 
that the act did guarantee to such railroad companies as 
came within its purview, all the rights of that statute, so 
long, at least, as it remained in force; and this act be- 
ing in force at the adoption of the Constitution, the 7th 
Section of Article 12 of the Constitution, providing 
“nothing in this article shall be construed to divest or 
affect rights guaranteed by any existing grantor statute 
of this State,” etc., whether intended or not, certainly 
embraced and saved the rights guaranteed to those rail- 
road companies under the statute of 1858. 

The Legislative department clearly recognizes the 
construction we give to Section 7, of Article 12, in the 
linal title of the Revised Statues, page 718 : — 

“ Section 4. All civil statues, of a general nature, in 
force when the Revised Statutes take effect, and, which 
are not included herein, and which are not hereby ex" 
pressly continued in force, are hereby repealed.” 

“ Sec. 5. The repeal of any statute, or any portion 
thereof by the preceding section, shall not affect or impair 
any act done or right vested or accrued, * * but 

every such act done or right vested or accrued * * 

shall remain in full force and effect, to all intents or pur- 
poses, as if such statute, or part thereof so repealed, had 
remained in force,” etc. 

“ Sec. 12. Nothing in the repealing clause of this 
title shall be construed as releasing any person or cor- 
poration from any duty enjoined, or limitation or con- 
dition imposed by any law that may be repealed by the 
repealing clause of this title.” 

The framers of the Constitution clearly intended 
that the rights existing under previous legislation should 
not be disturbed by anything contained in the Constitu- 
tion, by a technical construction of what were and were 
not vested or guaranteed rights ; and that it should not 


[ 20 ] 


rest alone upon a declaration of rights. derived under ex- 
isting grants, such as patents for lands, unrestricted and 
unrepealed franchises contained in acts of incorporation ; 
but it intended and so declared that the Constitution 
should not affect rights guaranteed by any existing statute 
placing it upon higher and broader grounds than the tech- 
nical question of divesting vested rights; therefore, if this 
right to immunity against legislative control, except by 
conditions contained in the 15th Section of the act of Feb- 
ruary 7, 1853, was an existing right guaranteed by the 
statute (and we think no one can successfully deny it), 
then this article of the Constitution did expressly secure 
to the railroads the rights guaranteed by that statute, to- 
wit: The right of impunity from legislative control un- 
til their earnings should pay all necessary expenses and 
fixed charges, and after that, pay 12 per centum per 
annum, on the capital stock. And this is still further 
confirmed by the sections quoted from the final title of 
the Revised Statutes, using almost the same language, 
and certainly intended by using the terms “ shall not 
affect or impair any right vested or accrued.” 

The construction we have endeavored to give to the 
act of 1853, in its operation as a contract or guaranty 
with any railroad company that has accepted its pro- 
visions in the modes already stated, cannot, as we be- 
lieve, be successfully refuted ; and if at all, it must be 
upon the most highly technical grounds. 

It is difficult to perceive any reason why the State 
can, by a special law, tie its own hands, and deprive 
itself of the power to abrogate or impair a contract, and 
yet have no power to do the same thing under a general 
law, which in its nature is public and universal as to the 
classes it may affect, and who may accept the same. 

THE STATE CANNOT AFFORD TO BE TECHNICAL. 

That the passage and continuance of this general 


[ 21 ] 


law, upon the statute books of Texas, has brought 
many millions of dollars into the 8tate, under the appre- 
hension that its provisions were in the nature of irrevoca- 
ble contracts , no intelligent men will deny. And even if, 
technically, it can be said that no railroad company in 
the State acquired such vested rights as to the matter of 
rates, as I have already contended for under the 1st and 
15th sections of the act of 1853, how can the State, in 
good faith, avail itself of that technicality to deprive 
capital thus invited and induced, of the protection which 
those provisions give it? 

The State cannot afford to be technical. The State 
cannot afford to act in bad faith to her citi- 
zens, either as a matter of right, or as a 
matter of sound policy. And, on the question now 
under discussion, the State has less pretext to violate its 
plighted faith, than if the soundness of the rule laid 
down in the 15tli section could be controverted. I main- 
tain that no wiser rule could have been adopted, or could 
now be adhered to, than the rule established by the 15tli 
section, which is in itself a rule of right. It was but 
formulating what was the true and just relation between 
the State and the corporations, and placing that formula 
upon the statute books. 

The capital invested in a railway is as much entitled 
to a fair return year by }^ear, as that invested in agricul- 
ture, in commerce, in manufacturing, in mining, or in 
any other lawful pursuit. 1 o get that return, such a 
rate must be permitted, upon the volume of business, as 
will pay all the current and necessary expenses of main- 
taining the line in a safe and good condition, paying the 
wages of employes, and all other expenses necessary to 
the maintenance and operation of a railroad, and then 
leave a fair per centum on the capital invested. Any 
rule which will not do this, is a confiscation of capital 


[ 22 ] 

which is not tolerated under any civilized, and especially 
a republican, government. 

Suppose, however, that it shall be held that this gen- 
eral law of 1853 did not have the effect, when accepted 
by the railroad corporations, to operate in the nature of 
an amendment to their charters, or to give them vested 
or guaranteed rights under the 15th section, con- 
strued in pari materia with the first section ; 
yet, when it is considered that the act was 
passed for the purpose of encouraging and pro- 
moting the construction of railway lines through a 
new country, and that its effects, in part at least, have 
met the forecast of the wise men who conceived and 
adopted that legislation, in checkering your State with 
over 8,000 miles of railroad, costing hundreds of millions 
of dollars, in capital brought from other States and other 
countries, can you, the successors of the men who passed 
that act, and the representatives of a State who held it 
out continuously for nearly 25 years, as an inducement to 
capital to embark in these enterprises, afford to stand 
upon a mere technical question, and. say, “We will not 
execute the act of 1853 in good faith ” ? Texas is a land 
of traditions. She has a long line of patriotic succes 
sions. Every department is full of them. Those who fell 
and those who survived her early struggles for indepen- 
dence established a priceless heritage of political free- 
dom. But it was left for those who constructed your 
highways to create your financial independence, and be- 
come, as they are, the authors of your present greatness 
and prosperity. The former you have honored in brass, 
in history, in story and in song. The latter ask only 
that fair and liberal existence guaranteed in the plighted 
faith of the men w T ho won this fair land from the Mexican 
and transmitted it to you, with the injunction to meet 
their promises with the same stern, true honest faith 
which their brave hearts gave them. 


[28] 


RAILWAY COMMISSIONS. 

If I am correct in the view I have taken of the act 
of February 7, 1853, it follows as a necessary conse- 
quence that a Railway Commission, independent of all 
other considerations, could not be clothed with power to 
change or affect rates on commercial traffic ; but I main- 
tain that the Legislature of Texas, whatever power it may 
have to appoint a Commission, can not, under the Con- 
stitution of the State, clothe that Commission with any 
power or authority to increase or diminish rates, or 
make classifications, the effect of which would be to 
increase or diminish the rates upon the transportation of 
freight. 

The last clause of Sec. 2 of Art. 10, of the Constitu- 
tion of Texas, reads as follows : 

“The Legislature shall pass laws to correct abuses 
and prevent unjust discrimination and extortion in the 
rates of freight and passenger tariffs on the different rail- 
roads in this State ; and shall from time to time pass 
laws establishing reasonable maximum rates of 
charges for the transportation of passengers and freights 
on said railroads, and enforce all such laws by adequate 
penalties.” 

This embodies the Constitutional power of this Leg- 
islature to fix rates upon railroads in Texas. 

I will not assert that railway management, and rail- 
way service, have either of them reached a state of per- 
fection. That there are evils and hardships, can not be 
truthfully denied ; but that they are less numerous than 
is sometimes asseited by gentlemen who either have 
some special grievance, or who hope to promote their 
political fortunes by creating a popular predjudice 
against wealth and the aggregation of capital, I sin- 
cerely believe. I do not believe one intelligent man on 
this committee gives credence to a tithe of what is 


L24] 


said on this subject. But I think I may assert with 
confidence that all the evils and hardships that 
do exist have already ample remedies provided by law ; 
remedies, too, which are within the reach of the hum- 
blest citizen in the land; and I have yet to learn that 
any of the constituted judicial tribunals of the State, 
from the justices’ courts to the great tribunals of final 
resort, have ever denied even-handed justice as against 
railway corporations, in favor of the poorest man in 
your State. 

Railroad corporations are artificial persons. They 
are, in almost every respect, except in their right 

to vote and in the duty to bear arms, citizens of the 
State. They exercise rights conferred, by law. They 
receive and pay out money. Their property is assessed, 
and they pay the taxes levied upon it. They contribute 
equally with all other property holders in bearing the 
burdens of government. Why, therefore, are remedies 
to be provided against them which do not apply 

to other persons? If there are grievances in 

favor of any, even the humblest in the land, 

which have no appropriate remedies upon your statute 
books, provide them by general laws, applicable alike 
to all other persons against whom such remedies may 
be enforced, and make them proper, wholesome and just 
remedies. It cannot be logically said that, because 
other States have provided for the appointment of Rail- 
way Commissions, and have such tribunals in actual ex- 
istence, that therefore Texas needs this luxury. 

Texas need not pass repudiation acts because other 
members of the American sisterhood have dishonored 
their fair names and bedimmed the lustre of time-hon- 
ored traditions by refusing payment of legal obligations. 

The question is, does Texas need a Railway 
Commission f 


[25] 


Evils may exist in other States that do not exist 
here. Remedies may be applied toother systems, wholly 
inapplicable within the borders of Texas. The fact that 
Missouri has a commission, or that Georgia and Illinois 
or Massachusetts or Iowa have commissions, proves 
nothing on this question in its relation to this State. 
Compared with any one of them Texas is a new State. 
Compared with any one of them, the railroad system 
here is in its infancy. Compared with any or all of them, 
the conditions here in climate, soil, area and population, 
volume of tonnage, amount of travel, etc., are dissimilar. 

There is no complaint in Texas that the maximum 
rate established by the law of 1879, for the transporta- 
tion of freights, in its practical operations, is too high. 
In fact I assert, with a confidence that challenges intelli- 
gent contradiction, that there is no dissatisfaction in the 
State with the maximum rates actually charged by rail- 
way companies for the transportation of freights. 

The Constitution itself, in terms too plain to admit 
of doubt, not only authorizes, but requires the legisla- 
tive department to fix reasonable maximum rates and 
prevent unjust discriminations, extortion and rebates, 
and the Legislature, soon after the adoption of the Con- 
stitution, diligently set about discharging this important 
trust, and their labors resulted in the act of 1879, which 
was incorporated into the Revised Statutes as sections 
4256, 4257 and 4258, making a penalty of $500 for each 
case of extortion, rebate, draw back, or injust discrimi- 
nation, recoverable at the suit of the party injured. 
What plainer or easier remedy can you provide for the 
protection of the shipper, against the unlawful acts of 
the common carrier, than this clear, explicit, and unam- 
biguous statute ? 

The snipper needs no commission to inform him 
when the law has been violated. You might as well 
provide methods by which, at the expense of the State, 


[ 26 ] 


all the wrongs of individuals shall be ascertained and 
righted, as to provide a special method of discovering 
and enforcing these rights and adjusting these 
wrongs. It is just as important to constitute a forum at 
the expense of the State to ascertain when usury is ex- 
torted by a bank, broker or other money lender, and to 
require the enforcement of appropriate penalties. It is 
well known to every member of this committee, that the 
citizen is not at a disadvantage in any of the courts of 
this country, when litigating with a railway corporation. 
If he is poor and unable to give securit}^ for costs he can 
sue informa pauperis , and he is n^ver at a loss to find 
an attorney who will institute his action, and prosecute 
his case through the courts, for a share of the recovery. 
Juries are ready and willing to do at least justice to the 
citizens, as against railway companies ; and no one com- 
plains or has reason to complain, that the judiciary 
have not acted with perfect fairness to the citizen in de- 
claring the law as between the citizen and corporations. 

Every act of your Legislature, the burden of your 
public journals, thousands of letters written in the inter- 
est of the State of Texas, have all given tens of thou- 
sands of assurances, in the most public and solemn 
manner, that the utmost good faith would be observed 
then, and in all time to come, toward capital which 
would be contributed to the development of a country 
whose territory was larger than that of any other State 
in the union, and whose population and wealth were so 
strikingly and enormously disproportionate to its area. 
Your people, through every medium of communication, 
were the more urgent on these questions, because you 
were without navigable streams, and the products of 
your soil, so largely in demand and so marketable in all 
commercial centers of the country, could have no profit- 
able outlet without the construction of long and expen- 
sive lines of intercommunication. 


[ 27 ] 


The policy that I have indicated was foreshadowed 
and repeated in the legislation of your State, from its ad- 
mission into the union, until the past few years. A 
different policy inaugurated now, by legislative enact- 
ment, which looks to an unjust burden upon these 
great properties, will as surely stop the flow of capital 
into your borders as effect follows cause. I know this 
belongs to a character of propositions difficult to prove 
in advance of actual demonstration, and I also know 
equally well that there is not a member of this commit- 
tee, or of the honorable body which you represent, who 
would pursue a line of policy calculated to retard the 
prosperity of your grand State. In your growth and 
greatness, your interest, and that of capitalists whose 
money, more than any other cause, has stimulated 
and promoted your present high prosperity, would 
appear to be identical. The capital invested 
in your railway systems has, as yet, been unable 
to realize a reward. The sworn returns from all the rail- 
ways of Texas, as reported to you by your Comptroller 
(and which you must take as authentic statistics), show 
that the railway system of Texas cost, in round num- 
bers, hundreds of millions of dollars. This is sim- 
ply flrst cost, not including the improvements on the 
properties since they were first put in operation, without 
estimating the outlay for terminal facilities since added, 
the replacement of iron with steel rails, stone abut- 
ments and piers for piling, and iron for wooden bridges. 
It does not include expensive ballast of stone and other 
material which is being put into your roadways as fast 
as the earnings will justify, nor does it include the enor- 
mous additions to the equipment to your lines. Under 
these circumstances we ask, is it wise to put it in the 
power of any Governor, whoever he may be, to appoint 
three men, who shall be clothed with the absolute power, 
without restriction or limitation, to prescribe the rates 


[ 28 ] 


at which passengers and freight shall be transported, re- 
gardless of what return it may bring to the capital in- 
vested? Put yourself in place of the capitalist, with 
surplus money at your command, would you, in the face 
ot such legislation, invest money in railroad enterprises? 
Would you put at hazard the savings of a life time, to the 
caprice and will of three men appointed by one man f 
There is not a man within the sound of my voice who 
will answer yes. Capital is proverbially ' timid. This 
applies to all capital, North or South, in Europe or 
America. It applies to capital in all past time ; it ap- 
plies to capital in the present ; it will apply to capital in 
the future. Suppose you should change the interest law of 
this State so that capital on loan could not command more 
than four per cent, per annum, and that all in excess of 
that amount would be usury, and not collectable : would 
you not frighten capital from your borders ? Why was 
the provision incorporated in your Constitution, making 
the legal rate eight per cent., and permitting a conven- 
tional rate of twelve per cent. ? It was to attract capital 
hither ; it was to induce money to leave the older States, 
where there was a plethora, and where less remunerative 
rates were allowed by law, to come into this new and 
growing State and reap a rich harvest. Every intel- 
ligent man knows if the provision were changed 
it would drive capital out of Texas, and pre- 
vent new capital from flowing in. Hundreds and thou- 
sands of men in the older States, attracted by this liber- 
al and wise provision, have sold their property and have 
become citizens of Texas, and are living on the money 
loaned at the rate of twelve per cent, per annum. Strike 
this provision out of your Constitution and you would 
drive these men out of your borders, or impoverish them 
if they remain, and prevent others, actuated by similar 
motives, from adding to your population and your aggre- 
gate wealth. 


[29] 


Only two or three of the States that have appointed 
commissions have conferred upon them the powers con- 
templated by the proposed change in your laws now un- 
der consideration ; and in one of them, already, they 
have been shorn of that power. And I may add, with 
due respect to the States that have adopted this policy, 
that it is a gross departure from the spirit of our insti- 
tutions, to clothe three men, or any number of men ap- 
pointed by one man, with power to arbitrarily control 
(or confiscate, if they will), millions of capital invested 
under an implied contract with the State that it should 
have equal protection with all other capital. 

Had the contemplated provision been engrafted in 
your constitution when adopted in 1876, the millions of 
capital since invested in your State, would have had fair 
and timely notice of the risks it was taking. But after 
capital has come, under friendly invitation, and with at 
least implied gurantees of good faith, I do not hesitate 
to declare that it is unfair and unjust, in a great State 
like Texas, even if she had every mile of railroad needed 
now, or in all time to come, to adopt a change so radi- 
cal in her policy towards these properties. It is not pro- 
posed to treat money in any other form, in this arbitrary 
and radical manner. You still allow the ginners of cot- 
ton, the compress companies, the wharfage companies, 
the insurance companies, banks, and all others 
who take toll from the products of the land 
or the industries of the country to measure their de- 
mands by their own cupidity, or by the necessities of the 
tiller of the soil. You still permit the merchants to 
make their own prohts on the absolute necessities of 
life, which make up the food and the raiment, and the 
shelter, and in a word, all the comforts and all the lux- 
uries of your vast population. The lumber mills of 
your eastern pineries, the lumber merchants, the carpen- 
ters, the brick makers and the brick and stone masons, 


[ 30 ] 


and the manufacturers of farming implements, are left to 
their exactions on your people without limit as to charges, 
and you furnish no special remedies to their customers. 

DISCRIMINATING LEGISLATION. 

The whole theory of special railroad legislation, 
whether organic or statutory, is that railroads and 
railroad property must be subjected to rules 
and regulations not applicable to other kinds 
and species of property ; that forums 
must be created for hearing and determining 
complaints against this class of common carriers, that 
shall have jurisdiction of the issues involved between no 
other parties, whether artificial or natural persons. The 
entire proceeding is upon the idea that these forums must 
be free from all interest in railroad properties, but are 
not interdicted from being shippers or carriers of freight. 
The largest shipper in any of the States where rail- 
road commissions have been established would be 
eligible as a railroad commissioner, although his profits 
would depend upon the lowest possible rate of freight 
that could be established ; but he is made entirely in- 
eligible if he own railway property. The true spirit of 
impartiality is that the juror and the court shall be in- 
terested on neither side of the question being determined. 
The theory of the friends of railway commissions is, 
further, that rules of evidence must be prescribed as ap- 
plicable to hearing and determining alleged causes of 
grievance, against railway companies, not known in any 
other class of litigation. From the decisions and rulings 
of these commissions no appeal or writ of error lies to 
any revising tribunal. Putting the whole question in 
few and plain words, the whole system of railway com- 
missions is discrimination against and hostility towards 
railway property. As I say elsewhere, the remedies 
provided by statute are ample for any possible grievance 


[ 31 ] 


that may arise, or ground of complaint preferred by 
any individual against the acts and doings of a railroad 
company. Indeed, the common law, as applicable to 
common carriers, is full, complete and explicit. It ap- 
plies to all carriers, and its recognized rules of evidence 
are the same that control the admission of testimony, 
oral or documentary, in all the courts, and between all 
classes of litigants ; and either party to the proceeding 
is entitled to an appeal or writ of error, as in other cases 
in which issues are determined. And if you can create 
a railway commission , and clothe it with power to tix 
the rates of traffic on all the railroads in your State, 
u without due process of law” as guaranteed by the 
Federal Constitution, and give no right of apoeal or writ 
of error to the railway company, and if such a law 
would be constitutional, then you must admit that the 
commission can arbitrarily fix rates that in their results 
might be a confiscation of the railroad properties of 
your State. And from their decision there would be no 
redress. One of the purposes and objects of the pro- 
posed legislation is to create such a commission and 
clothe it with such powers. 

All law writers, courts and statesmen, in Europe 
and America, have been profuse in their eulogies of the 
common law. It was said by one of England’s eminent 
men that “no one was so high as to be above the cor- 
recting influence of the common law, and no one so low 
as to be beneath its guardian care.” When a govern- 
ment, State or national, republican or monarchial, yields 
itself to unjust discriminations against honest and 
laudable callings and necessary avocations, it endangers 
not only the existence of that government, but of every 
enterprise that deserves its protection. The spirit of com 
munism that levels its deadly shafts to-day at railway 
property, will to-morrow hurl them at commerce in all 


[ 32 ] 


its varied forms, and aggregate wealth in any shape it 
may have assumed, whether under the direct sanction 
of law or otherwise. 

I do not understand that a legislator is an automaton. 
I have never heard that it was the duty of a representa- 
tive to voice in his votes the pernicious and hurtful 
sentiments of his constituency, or to formulate into law 
the unjust prejudices of any part of the community rep- 
resented by him. It behooves the representative to 
examine every question calculated to affect the public 
welfare, or the interests of private individuals, or of 
aggregations of individuals, and determine for himself 
whether the proposed legislation will be hurtful or not ; 
or, if not positively hurtful, whether it will subserve any 
general good, and act accordingly. If you would create 
a separate forum to determine the value of transporta- 
tion by railroad and enforce penalties for the violation 
of their orders, or for violations of law, you would have 
the same right to change the constitution so as to create 
a separate court to hear and determine the complaints of 
tenants against the landlords, and to fix the value of 
wages in your cotton mills and your compresses, and 
every other manufacturing establishment within your 
borders, and also to regulate and control the price of the 
manufactured articles. And the principle would hold 
good as to all avocations. 

DISCRIMINATION. 

Discrimination by railroad companies is denounced 
as an offense deserving punishment by the infliction of 
the severest penalties, and yet it is proposed that the 
law, both organic and statutory, shall discriminate 
against them by constituting a forum, clothed with 
power to measure the value of the transportation of a 
ton of freight from one mile to eight hundred miles. You 
propose to clothe this forum with arbitrary powers for the 


[ 33 ] 


government of one class of transportation companies 
alone, and from the acts of this forum of arbitrary and 
unlimited powers, that more than a hundred millions of 
capital shall have no redress, such as is allowed the 
humblest citizen of the land, or to the smallest corpora- 
tion that may be organized under your general laws. 
And singularly enough, this new forum is to be clothed 
with powers to hear and determine complaints against 
railroads, but shall have no jurisdiction to right the 
many wrongs of which the railroad companies are the 
victims. 

It is true the capital thus to be proscribed is owned 
in other States and countries, invited here by legislative 
acts and resolutions, and by the press, for a period co- 
extensive with your existence as a State. Suppose it was 
the capital of your own people, generally distributed 
over the State, would the proposed legislation be seri- 
ously considered ? It may well be doubted whether, if 
proposed, it would command any favor. 

No such restrictions are thrown around such prop- 
erties in States in which they are owned by citizens. 
Look at Pennsylvania, with the best system of inland 
transportation in the world, yielding a revenue to the 
State sufficient to defray all her expenses. Railroad 
properties there have never been burtliened by such dis- 
criminations. The natural laws of commerce, unham- 
pered by statutes, have given the tonnage of that State 
the cheapest tariff on this continent, and at the same 
time, fair dividends to the stockholders. 

New York has prospered in her trade and commerce 
without a parallel, under the same great laws, and with- 
out restrictive statutes. True, the mad, senseless clamor 
of the Anti- monopoly League of the city of New York, 
organized and promoted, not in the interest of the pro- 
ducer, but of the produce gambler , has recenty intimi- 
dated the Legislature into the creation of a commission, 


[34] 

but one without such powers as the pending resolution 
proposes. 

RAILROADS IN TEXAS ARE NOT MONOPOLIES. 

The cry of monopoly, as against them, is the slogan 
of the hustings. Under your general law, any ten men may 
obtain a charter at a trifling expense to build a railroad 
parallel to, or competing with, any line within your 
borders, with connecting links to every hamlet, town 
and city in every county of your State, with the same 
rights, powers and privileges, as have already been con- 
ferred on other railway corporations organized since the 
adoption of the constitution of 1876. If your people 
will risk their capital in new railroads, instead of loan- 
ing it at 12 per cent, they can have competing lines in 
every county town, and every important shipping point. 

Railroads in Texas, therefore, I repeat, are in no 
sense monopolies. It is no answer to this assertion to 
reply that when roads are built, stronger corporations 
buy them and operate them in their general system. 
Railroad capitalists cannot buy, if owners will not sell. 
If your citizens will hazard their capital, there is no let 
or hindrance to building new and independent railroads 
from Galveston to St. Louis, or to New Orleans, or to the 
city of New York. 

To this it may be replied that new lines would not 
pay interest on the capital invested. If this is a fair 
answer to the declaration that railroads are not monopo- 
lies, you could prove by the same rule that a cotton 
compress at any given point was a monopoly, because 
there is not business enough at that point to invite com- 
petition. And by the same process of reasoning you 
could prove any business a monopoly. 

Another substitute for argument, equally as unfair 
and senseless is the denunciation of the so-called 
“Wealth of Railroad Kings.” Does the fact that an 


[ 35 ] 


officer or a stockholder of a railroad company is rich, 
furnish any argument for harsh and unjust legislation? 
The same reasoning would justify hurtful legislation 
against the cattle interest, because there are rich so- 
called “Cattle Kings” in your State. 

It is a capital mistake often made in the halls of 
legislation, and on the hustings, to declare a reduction 
of rates on freight necessary, because railroad owners 
are rich. L have already shown by authentic and un- 
contradicted statistics that no railway in the State has 
earned enough to pay any dividends to its stockholders. 
The fortunes that are supposed to have been amassed 
by railroad men in America have not been derived, to 
any considerable extent, from the earnings of these 
properties. The largest dividend paid on the stock of 
any of them is much less than lawful interest in Texas. 
These men have made their fortunes by speculation. 
It is much more profitable to loan money in 
your State at the conventional limit of interest 
than to hold stock as an investment in any railroad 
company in the United States. And it must be remem- 
bered, too, that the number of stockholders in railways 
who have not grown wealthy is infinitely greater than 
those who have. I am familiar with the affairs of 
at least one railroad in your State, whose stock is held 
by more than two thousand different persons, who are 
awaiting an increase in the volume of tonnage, con- 
sequent upon a well founded hope of increased produc- 
tions as the State improves. 

We told your predecessors years ago that unfriendly legis- 
lation would bankrupt existing corporations and palsy the 
hand of the builder of new lines. We did not pretend the 
gift of prophesy ; we were only reasoning from cause to effect. 
Since that time, about 4,500 miles of the lines of Texas have 
been compelled to suspend the payment of interest and apply 


[ 36 ] 


all their earnings to improving properties so dilapidated as to 
be unfit and unsafe for the transportation of passengers and 
property, and in such condition as to invite the action of the 
State to forfeit the franchises of some of them. Many were sold 
to discharge their mortgage debts. Others are on the verge of 
ruin. The line I represent especially, contributed its earnings 
for nearly three years with a contribution of nearly $2,500,000 
from its stockholders who held certificates of full paid stock, to 
replace its worn-out rails and its decayed and worn rolling 
stock. And where do you see the grader and where do you 
hear the heavy thud of the spike maul in the construction of 
new lines ? The forces are disbanded, or gone to more inviting 
fields. The new lines are on paper and there they will aud 
ought to remain, until the biennial threats of hostile legisla- 
tion are withdrawn. Senators have been made and Represen- 
tatives to Congress have been elected on this hobby, but has 
Texas, having more of the natural elements to make her the 
Empire State of the American Union within her grasp, no 
higher ambition than to make Senators and Representatives 
from the ranks of her learned professions ? Has her com- 
merce, her agriculture and her mechanic and mining interests 
no claim on her attentions? Yet we know full well that until 
you twice or thrice multiply your railroad mileage you cannot 
develope your countless millions of unrealized wealth. And 
where can you find capitalists, in the light of the experience 
of those who have come to your rescue in the past, and given 
you hundreds of millions of increased wealth and two millions 
of population under your assurance of protection, while a con- 
tinued menace is held over the millions already invested ? 
They will not and ought not to come. 

My friends, I am much more largely interested in the soil 
of Texas, than I am in the stocks and bonds of her railroads. 
Of the latter I have scarcely enough to give me a decent burial, 


[ 37 ] 


of the former I have enough to “ keep the wolf from the door ” 
the few remaining years of my life. I have associations in 
Texas born in the hours of adversity, and I may say, of storm 
and blood, which I would not disturb for all I may expect from 
the railroad interest of Texas, direct and remote. But I would 
hazard an opinion : Let this senseless war against railways and 
railway capitalists, here and elsewhere, progress to its logical 
sequence, and the next attack will be made upon individual 
capital, and then the anarchist and socialist will rule the hour. 
Continue to promote the ambitious schemes of a few men who 
are crazy for place and power, and there are men under the 
sound of my voice who will live to see the day when they will 
wish they had not been born. The true office of government 
is to protect all alike. To protect labor so as to insure its 
proper reward, and to protect capital that it may reap a reason- 
able return. Capital and labor are mutually interdependent. 
One cannot live without the other. Where there is no capital, 
labor cannot be rewarded, where there is no labor, capital must 
remain idle and derive no income. This results in stagnation 
to every department of industry ; therefore, the true office of 
the legislator is to protect both alike. When the legislator 
does this he has fulfilled an honorable and glorious mission. 

Discrimination. 

I observe through the papers that bills have been intro- 
duced during the present session, the object of which is to pre- 
vent discrimination. In this connection I beg to call your at- 
tention to Articles 4251, 4252, 4253, 4254 and 4255 of the Re- 
vised Statutes of Texas, an examination of which will show 
that the commerce of the country is completely protected 
against discrimination by railways, besides remitting to the 
person injured the right to recover any other damages incurred 
by reason of the violation of this provision. These Articles 


[ 38 ] 


are full, complete, and effectually provide against discrimina- 
ting against other lines or as between shippers. I beg leave 
to also call your attention to Article 4258 B, Section 7, which 
containg other provisions against discrimination against any 
person or place in the State and makes the railway company 
violating the same guilty of extortion. 

Maximum Rates. 

Other bills provide that the maximum for carrying freight 
as provided in Article 4258 shall be reduced. It will be found 
by examination of the freight bills now and heretofore in use on 
the railroads in Texas, that the products of the field and farm, 
agricultural implements and all the necessaries of life do not 
reach the maximum now prescribed by law, and that maximum 
is probably reached in no case except upon very expensive 
goods, the tonnage on which amount to but little, but the risk 
to the carrier for their loss or damage is very great in conse- 
quence of their great value. To this class belongs silks, laces, 
fine clothing, and other very expensive goods. 

RESTRICTING RATES ON LOCAL BUSINESS TO THE SAME 
RATES CHARGED ON INTERSTATE COMMERCE. 

I have not seen the bill or bills that propose this 
change in the freight charges of railroads, and can only 
express my views generally upon that subject. In ad- 
dition to what I have said upon the rights of railroads 
under the Act of 1853 , we have only to say that if any one 
of these bills is passed, its tendency will be to reduce the 
aggregate of earnings of railroads, which they are in no 
condition to bear, and the railroads, in order to protect 
themselves, will have to advance the rates on all through 
business so as to protect the local business of the State. 
I have said before, and I challenge investigation of the 
facts— if not believed by any member of the committee, 
or any member of the Legislature— that no railroad in the 


[ 39 ] 


State is now earning money enough to pay its fixed 
charges. The cry of “ watered stock ” is the slogan of 
the hustings. It makes no difference whether a railroad 
company has a hundred thousand dollars per mile or a 
thousand dollars per mile of stock, if it never reaches a 
point to declare any dividends. The earnings of railroads 
in Texas have not yet reached a point where dividends 
on stocks or the amount of stock issued per mile has cut 
the slightest figure in transportation rates. 

The cost of operating railroads in Texas — and I may 
say in most of the Southwestern country — is very much 
larger than in the States east of the Mississippi River. 
In Iowa, parts of Illinois, Pennsylvania, Ohio, and in 
other localities, coal of superior quality costs the railroad 
companies but little over a dollar per ton, while there is 
not a railroad company in Texas that gets its coal for 
less than three dollars per ton, and many of them pay 
much higher. You will be surprised to learn that the 
Texas & Pacific Railway Company, which I especially 
represent, paid last year for fuel nearly seven hundred 
and fifty thousand dollars, including the New Orleans 
Division, having a mileage of less than fifteen hundred 
miles. 

The rate of wages, too, is higher ; the cost of cars 
and locomotives is greater, because of long hauls from 
the shops, where such articles are purchased. All 
material that goes into our road-beds for original con- 
struction and for repairs, the wages of every class of la- 
borers, and indeed everything that goes into the expense 
account, is much greater in Texas than it is in the States 
east of the Mississippi River. 

THE DEMOCRATIC PLATFORM. 

It has been said by Democrats of this body that the 
State Democratic Platform, adopted at Dallas in August 
of last year, commits the members of the Legislature to a 


[ 40 ] 


Commission Bill. I call your attention to that platform, 
section 8 : “ We favor the enactment of such laws as shall 
restrict the freight charges of railroads and express com- 
panies so that they may only yield a fair interest on the 
money invested in them, and at the same time prevent 
discrimination in charges against any point in the 
State;” and after which the resolution passed by a ma- 
jority of the committee, was enacted, “That the next 
Legislature shall pass laws delining trust bills and all 
illegal combinations in restraint of trade, and imposing 
severe penalties in regard thereto.” 

This is the whole platform, and nothing is contained 
in it advocating the passage of a law to create a railroad 
commission, and is all there is in the platform relating to 
railroads, most of which is the law to day, and will be 
found in the Statutes. 

All we ask is a fair interest on the money actually 
invested in railroads, and we are already prevented from 
unjust discrimination against any points within the 
State. 

In conclusion, Mr. Chairman and gentlemen, I crave 
your pardon for having reverted at such length to these 
questions, and if I have contributed anything to illustrate 
the true condition of the railroad properties of this State, 
and the relations that exist between the industries de- 
veloped and developing on the one hand and the rail- 
roads on the other, I shall feel that my visit to the capi- 
tol has not been in vain. I especially thank you for your 
•courtesy and kindness in granting me this hearing, and 
beg of you to consider well both sides of the questions 
before you make an experiment that may prove disas- 
trous to many of the great interests you represent. 


REJOINDER OF JOHN C. BROWN TO THE REPLY OF JUDGE 
TERRELL TO HIS ARGUMENT OF THE 26 th JANUARY, 
1889, BEFORE THE HOUSE COMMITTEE ON INTERNAL 
IMPROVEMENTS. 


[The Committee adjourned from Saturday until Monday, at Judge Terrell’s request, 
to give him time to prepare his reply. .] 

Mr. Chairman and Gentlemen of the Committee : 

Judge Terrell with his learning and great ability, 
has gone over a vast amount of ground. I have taken 
forty-seven notes, and stopped in despair; and I shall 
notice only a few of the salient points, and then give a 
resume of my argument before this committee on Satur- 
day. 

In the outset, I desire to say that the distinguished 
gentleman, without intending it, has uttered sentiments 
which, upon reflection, I think he will regard as un- 
worthy of him. The whole implication of his argument 
is that you must believe what he and Henry Clews say, 
but that the utterances of railroad men are utterly un- 
worthy of trust and confidence. I do not mean to dis- 
parage Judge Terrell, but who is Henry Clews ? A 
banker and a broker in New York, who was one of the 
main conspirators in 1873 with Jay Cook — not Jay 
Gould — to bring the great financial disaster upon this 
country which has never been equaled since the organiza- 
tion of the government of the United States. How did he 
do it? He did it by buying and selling and by encouraging 
others to speculate in the class of securities he is to-day 
denouncing. He overbought and went into bankruptcy, 
and paid his honest creditors at a very low per cent., 
perhaps ten cents on the dollar. To-day he is a million - 
are, and no man, woman or child — although the children 
might be in rags and the women widows in tears, suffer- 


[ 42 ] 


ing for tlie necessities of life — has ever gone to him and 
asked for an additional payment, although he has his 
millions, that has ever received it. He made two im 
mense fortunes out of the very securities he is now de- 
nouncing. He is not a railroad builder, he has never 
built a railroad in his life, and he knows nothing about 
railroads only so far as he has seen them by riding upon 
their trains ; yet he is arrayed as a witness against hon 
orable gentlemen who are connected with the railroad 
interests of this country. 

And then some unknown and unnamed man is ar- 
rayed by Judge Terrell as a witness to prove that rail- 
roads could be reproduced in Texas for $10,000 per mile. 
Who is that man? Where does he live? What has 
been his experience? This is even more unreliable tes- 
timony than that of Henry Clews. There is not 100 
miles of territory in the State of Texas where a railroad 
is needed to-day, or 100 miles that I have ever seen, 
where railroads are already built, over which ne.v roads 
could be constructed at $10,000 per mile, or the old roads 
could be reproduced for that sum of money. These are 
facts ; yet we cannot be believed ; we are to be falsified ; 
our statements are to be set aside and held for naught, 
upon the testimony of an unnamed man and upon the 
testimony of Henry Clews. Is this fair, or is it a legiti- 
mate argument before a committee who are seeking for 
information ? 

The charge is made that our freight rates were ad- 
vanced the other day by Waldo. Waldo advances no 
freight rates ; he makes no freight rales; he has not 
made any freight rates that were to continue for more 
than ten da}'s at a time, perhaps, on a few occasions ; 
but even that is not done by him now. The rates are 
made by agreement of the representatives of the rail- 
roads and promulgated by Waldo, and Waldo had no 
more power to make these rates than you had. And yet 


it is said that Waldo advanced the rate thirteen cents 
the other day in St. Louis, and that statement is made 
upon the authority of a single St. Louis paper. This is 
the character of evidence adduced against us. If you 
want evidence, send your committee to the railroad 
offices and examine their books. It is said some of us 
keep our offices in New York. I believe but two or three 
of the railway companies of Texas have offices in New 
York. The one I represent has a financial office in New 
York, but it has but one officer there who receives a dol- 
lar salary — that is the Secretary and Treasurer, and I 
believe it costs about $3,000 or $4,000 a year. Our gen- 
eral office is in Texas. Every earning and every ex- 
pense is recorded in our books at Dallas ; our statements 
are made at our Dallas office, and our New York office 
absolutely cannot manipulate the earnings or the ex- 
penses of the Texas & Pacific Railway. 

This statement of the gentleman is sheer, wild im- 
agination. It is not new, however; I have Imard it time 
and again before. But we are not the only people who 
have had the anathemas of the honorable gentleman, by 
implication, and I mean nothing unkind when I say this. 
I had handed to me this morning, for the first time, an 
address delivered before the literary societies of the 
University of Missouri, on June 1st, 1885, by my dis- 
tinguished friend ; and while I had no time to read it, 
I intend to do so because I am always interested in read- 
ing his productions, and think his style is unsurpassed 
by any man in the south or southwest. But his imagin- 
ation gets away with him and goes wild He has too 
much poetry, hence the faultiness of his facts. 

Speaking about corporations and their evils — after 
going on for a number of pages upon the subject — he 
comes down to the remedy : 

“ The ultimate remedy for the evils threatened, he 


[44] 


remarks, ‘ the ultimate remedy ’ — not that the remedy 
has been applied nor is being applied — but “the ultimate 
“ remedy in the future for the evils threatened by the 
“ growth of corporate power is already at work, and will 
“ultimately triumph in the universal education of the 
“ people up to a standard to enable them to understand, 
“ and by peaceful methods to enforce their rights. The 
“present remedy is to create an intelligent public senti- 
“ merit which will demand that the law-making depart- 
“ ment of the government, which is the Legislative de- 
“ partment, shall be filled with men whom corporations 
“ cannot control .” 

My friend has been in the Legislature very often, 
and is, perhaps, better informed on this subject than I 
am, but I did not know that any corporation was con- 
trolling any Legislature in this country or elsewhere. 
Here is his declaration, however, that the present remedy 
is to create a healthy public sentiment, “ that the law- 
making department of this government shall be filled 
with men whom corporations cannot control.” Great 
heavens, what little confidence he has in you ! If corpo- 
rations control 140 men, which I believe is the number 
in the two houses of your Legislature—^/ corporations 
control that great number, what in the name of common 
sense would become of three little men that the governor 
would appoint as railroad commissioners ? 

Now the gentleman is splendid at figures. I never 
saw a man who could rattle figures off in greater profu- 
sion, and I might say, in greater extravagance, than he 
has done to day. I should like very much for him to 
solve that problem ; but he continues the subject in that 
address, “ and when they get entirely filled with men 
“whom the corporations cannot control, who will, with- 
“ out destroying values, require every corporation cre- 
“ ated under laws which reserve the right to control to 
“ pay its debts, divide its property, and close shop in a 


[45] 


“ defined period.” I would like to see how a railroad 
company would divide its property among 2,000 stock- 
holders. How would you go about dividing the property 
of the Texas & Pacific road among 2,000 stockholders ? 
Or, take a corporation that invested $75,000 in a com- 
press. He wants our Legislature, who he assumes has 
the control of corporations, at once, or as soon as possi- 
ble, to take away the franchise and let the company pay 
its debts, divide its property and get out of the country ; 
and so he may enumerate all the other corporations. A 
public corporation, as f understand it, is a municipal 
corporation. I understand that a railroad or a compress 
or any other corporation that has money invested in it 
for profit is a private corporation ; many of them being 
devoted, in part or in whole, to public uses. 

The Legislature cannot deprive the latter class of 
chartered rights, unless the corporation has given suffi- 
cient cause by its own acts. 

Now a railroad becomes a fixture in the country. If 
you deprive it of its charter for violations thereof, it can- 
not be run as a railroad, and if you repeal the law au- 
thorizing new charters to be obtained, then it cannot re- 
new its charter so as to run its railroad. The courts 
have held that the property, nevertheless, remains with 
the owners charged with the debts that have been put 
upon it ; but it cannot be run as a railroad. The only 
thing left for them would be to take up the rails and the 
ties and sell them for the best price they can get in the 
market. 

Not only are we regarded by Judge Terrell as very 
bad men, but the Legislature as well. But the judge 
ought to know better than I about this, because he has 
been a member of the Legislature and I never was. He 
says that I emphasized too much the Brewer case in as- 
suming that the Legislature had no absolute and unlim- 
ited control of the railroads. If I mentioned the Brewer 


[ 46 ] 


case but once I fail to remember it, and that was only 
incidental, as it was not a part of the argument I had 
prepared. 

I believe it is the settled law to day that no Legis- 
lative power, under the constitution, can confiscate pri- 
vate properly because it is the property of a corpora- 
tion, while the corporation is legitimately exercising its 
functions. 

Judge Terrell, in the face of the adjudications of the 
United States Supreme Court, holds a contrary view. 

He refers to the Constitution of Illinois and the rail- 
way commission appointed under it. There is a broad 
difference between the constitution of Texas and the con- 
stitution of Illinois, as well as other States which have 
commissioners, but I will pass this over at present as I 
have not the exact data at hand. He says that in eight 
other States, including Tennessee , there are commis- 
sions authorized to fix freight rates. Tennessee has 
no commission for any purpose. She passed a law au- 
thorizing the appointment of a commission, and one was 
appointed and it lasted a short time, when the Legisla- 
ture repealed the law by a three-fourths vote. They were 
instructed by the people to repeal the law, because it was 
made a question in every county in the State. So there 
is no luxury of a commission in that State now. That re- 
duces the number to seven, and if you will examine into 
the seven you will find that only four of those have the 
right to fix rates, by classification or otherwise. 

He says that no one opposes the appointment of a 
commission except railroad owners. I have seen a great 
many people, and he will find them here, who oppose 
the appointment of a railway commission, who are not 
railroad owners. If I am not mistaken, a great many 
men in this honorable body, and in the honorable body 
at the other end of the capitol oppose the appointment 
of a railway commission ; and I reiterate what I said on 


[47] 

Saturday, that Judge Roberts, a man who stands as 
high as any judicial light in Texas — a man who is wide- 
ly known as authority on the constitution of Texas — 
said, in a lecture to his law class, that a railroad com- 
mission would be in violation of that constitution. If 
anybody doubts this, let them inquire at the proper 
source. I have not seen him, but have read a part of 
what he wrote and delivered before one of his classes. 

Judge Terrell says that I am inconsistent, because 
at a previous meeting of a committee years ago I said 
that competition would cure all the evils, and yet that I 
joined an association to pool earnings. I have no recol- 
lection of such statements. I have never belonged to 
any association in my life that pooled earnings. My 
road never has been, since I have been connected 
with it, a member of such an association ; yet it 
would be best, in my opinion, for the commerce of this 
country if the earnings at competitive points were pool- 
ed by a reasonable legal and proper method. But I be- 
long to no association that has done it. 

He says that the recent advance in rates will cost 
Texas $6,000,000. Here he comes again to that great 
scattering of figures that no man can keep up with* 
The charge is utterly without foundation. He says 
that Texas paid tolls to the railroads amounting to 
$31,000,000. Does the gentleman happen to know that 
of these reported earnings, only about 10 or 12 per cent, 
are upon local business? The balance is interstate com- 
merce ; it is through business, some of it originating in 
Europe. Much of it comes in bond here and goes to 
Mexico. It includes business that goes to California or 
comes from California; business that comes from New 
York, from St. Louis, from Kansas City and from all other 
points outside of the borders of Texas. I will say that 
15 per cent, is a large estimate of all the earnings of 
Texas railroads derived from local business. Yet he 


[48] 


would have you believe, (I do not mean that he desired 
to deceive you, but he simply has not investigated the 
question), his remarks would tend to make you believe 
that all of this $31,000,000 have been entirely drawn 
from the producer and the consumer of Texas. 

This is the total of all gross earnings by railroads in 
Texas, for the hauling of all freights of every class and 
desscription, passengers, mail, express — into and out 
of and across Texas. When you consider that there 
are eight thousand two hundred miles of railway in 
Texas, representing an aggregate cost of nearly three 
hundred and thirty- live millions of dollars, and many of 
them running through regions destitute of population 
and without water, with no coal worth speaking of with- 
in the borders of the State, this is a small earning, and I 
venture the assertion that no eight thousand two hun- 
dred miles of railroad in anj^ other State or country can 
be shown with such small gross earnings. But the dis- 
tinguished gentleman fails utterly to inform you that 
this is the gross revenue derived by the railroads, and 
from that is to be deducted all the expenses of maintain- 
ing and renewing the road beds, running trains, keeping 
up shops, paying salaries and pay-rolls, and all other 
expenses to which railroads are subject in the operation 
of their properties. If you will take pains to look at 
the published statistics from your Auditor’s office, you 
will find that for the twelve months ending the last day 
of August, 1888, which is the time prescribed by your 
statutes for railroads to make their sworn statements to 
the Comptroller, that while the thirty odd railroads in 
your State, comprising a mileage of about eight thous- 
and two hundred milas, earn, gross, $31,244,950.07 ; and 
actual expense of maintaining the properties, such as 
repairs to road beds, locomotives, cars, etc., and the act- 
ual payment of transportation charges, amounted to 
about two thirds of this amount or precisely $20,270, 


[ 49 ] 


737.47, leaving in round numbers eleven millions of dol- 
lars to pay interest on the bonded indebtedness and div- 
idends on the stock. You will find further from the sta- 
tistics that the bonded indebedness of these roads ag- 
gregate $221,409,340.10, and you will find from examina- 
tion of Poor’s Manual for 1888 that the average interest 
upon these bonds is six per cent. ; some of them bearing 
four, some five, others six, others seven and others eight. 
A fair average however is six per cent. This will show 
a deficit in the interest account of the railroads in Texas 
for that year of $2,284,560, without paying any dividend 
upon the stock; the paid up stock amounting as it does to 
over one hundred millions of dollars. These are statis- 
tics which Judge Terrell, with all of his ingenuity and 
his distinguished learning, cannot refute by facts or by 
argument. 

My distinguished friend seems to take special ex- 
ception to what I said on Saturday evening, that this 
question was fanned up by men who were ambitious of 
place and power. I did not know he would be so ten- 
der. I did not think he would pay any attention to that? 
because if it did not apply to him I did not think he 
he would care for it. I did say on Saturday evening that 
this question was agitated very largely by men who 
were hunting place and power. I did not say entirely; 
I did not mean that. Yet I remember distinctly that the 
distinguished gentleman, since he has brought this ques- 
tion prominently forward, a little more than two years ago 
canvassed the State upon that question. That was one 
of the chief themes, and I believe he was a candidate 
before the legislature. That reminds me of a very good 
story, which I will tell. There was in Nashville, Tenn., 
an old, privileged colored man, long ago, who said 
pretty much what he pleased to almost everybody, 
and almost everybody took it kindly. He met 
upon a street corner one day a gentleman who had just 


[50] 


previously made a canvass of the State and got beat. 
He said something very saucy to Csesar, and Caesar 
spoke very roughly in reply. The gentleman said : u I 
don’t know why you say that to me, Caesar ; you don’t 
know who you are talking to.” After a reflective mo- 
ment Caesar said, very deliberately : “O, yes, I knows 
who you is. I remember now dat you’se de gentleman 
what made a little ’speriment for de United States Senate 
and got beat.” 

I grant that any citizen has, as he says, as much 
right to discuss this question as an agent of a railroad 
company, and especially one who is not a citizen of the 
State. I can only claim this as a matter of courtesy. I 
have the charge of a vast property in my keeping; I am 
a trustee for that property, and I would violate my trust 
if I were not to protect it by all honorable means and 
upon all suitable occasions. The gentleman, I repeat, 
has as much right to come here, and perhaps more, than 
I have. I remember, however, reading a long time ago 
that Cincinnatus was called from his plow by the people 
into the councils of the nation. It would seem, indeed, 
that Judge Terrell believes that the people have called 
for my distinguished friend as the modern Cincinnatus, 
for he assumes the role of the “Ajax Telemon” of the'op- 
position; and he has aright to repose in that conviction. 

The learned gentleman argued more upon the want 
of wisdom in the passage of the Act of 1853 than he did 
to disprove my proposition that that act constituted a 
contract. I said on Saturday, and say again to day, that 
the Act of the 7th of February, 1853, was a contract be- 
tween the State and all the railroads then in existence, 
and all of them that came into existence up to the adop- 
tion of the Constitution of 1876; and all the rights and 
benefits acquired under the Act of 1853, up to and until 
the adoption of the Constitution of 1876, were rights 
vested under a legislative contract, made between the 


[ 81 ] 


State and the corporations, and I am able to show by the 
opinions of the Supreme Court of the United States in 
more than one case, that they have recognized contracts 
made by acts of the Legislature with banks and other 
corporations, and with individuals. He says that when 
the power to amend or repeal is not reserved, the State 
can not impair the franchises. That is all right. But in 
direct conflict with the previous part of his argument and 
his utterances elsewhere. 

Then he brings Mr. Gould into the question. Well, 
I do not think Mr. Gould is wrong in his statements. All 
other things being equal, I grant that every corporation 
is uuder the reasonable control of the legislative branch 
of the government; but if the government gives to the 
railroads, or other corporations, certain rights and privi- 
leges which are accepted by such corporations, and in 
consideration of which capital is invested, and the cor- 
poration is exercising those franchises, then the Legisla 
ture can not impair those rights by any act, and if the 
franchises are withdrawn they must be withdrawn by the 
terms stated in the original grant, or by the law as it ex- 
isted at the time the original grant was made and to 
which it referred. If a charter confers undoubted power 
upon a railroad company to fix its rates of freight up to 
a given maximum, the Legislature can not afterward re- 
voke that power. If when the charter is granted there is 
a general law in existence authorizing the Legislature to 
repeal any law it may make, the Legislature may do it 
but not so as to divest vested rights. Just as they say 
in the Georgia case — the case of the Savannah, Flor- 
ida and Western Railway Company. The Savannah- 
Florida and Western Railway Company was made up of 
three corporatians. The case was decided by 
Judge Wood on the circuit, who held that those cor- 
porations, although some of them were authorized by 
their charters to fix their rates up to a maximum, yet 


[52] 

*vhen they reorganized by a new consolidation, the 
new company lost this right, because the code 
of Georgia, by one of its sections, provided that no rail - 
road company should organize or reorganize in the State 
of Georgia without subjecting itself to the right or power 
of the Legislature to fix rates or to repeal its charter. 

The distinguished gentleman says that the Texas & 
Pacific Railway cannot claim exemption under the Act of 
1858, even if valid; because the Texas and Pacific was 
made up of the Southern Pacific, Southern Transconti- 
nental, Memphis & El Paso, etc., and afterwards consoli 
dated with the New Orleans Pacific. All of the consoli- 
dations mentioned by him were approved by the Legis- 
lature of the State of Texas except the last, and that' 
too, before the adoption of the Constitution of 1876, and 
of course in reference to the Act of 1853. That a consol- 
idation was made with the New Orleans Pacific — a rail- 
road company in another State — is not true. It was not 
consolidated with the New Orleans Pacific, but the Texas 
& Pacific purchased its property and stock, which it had 
a right to do under its charter — the charter of the South- 
ern Transcontinental and the New Orleans Pacific had 
the statutory and charter right to make the contract. 
The argument that this affects our rights under the Act 
of 1858 is very far fetched, and too attenuated and gauzy 
to require further comment. This is another specimen of 
the vaulting feats of the gentleman’s ambition. 

He says that no report appears of the earnings 
the Texas & Pacific for the year 1887 in the 
Comptroller’s office. If the gentleman will write to 
New Orleans he will find that the report of the earnings 
and expenses was made to the court in whose custody 
and keeping all the affairs of the Texas & Pacific were 
confided, and controlled by a receiver. But in 1888 I can 
tell him that the earnings and expenses are in process of 
being printed now, and that the earniiigs did not pay the 


[53] 


fixed charges of the road after deducting the expenses of 
maintenance and operation; and by fixed charges I mean 
interest on the bonds that were issued, not at the mere 
will of the Texas & Pacific Railway Company, but by 
authority of Congress and by authority of the Texas 
Legislature. In the reorganization we put $8,000,000 of 
these bonds out of the way by selling our lands to the 
holders of them; and we scaled the interest one percent., 
making them 5 per cent, bonds. Instead of watering it 
we have been deducting from it; and although the inter- 
est upon the first mortgage bonds is equal to $625,000 
every six months, or $1,250,000 per annum, our earnings 
in 1888 will show that we have not made money enough 
to pay it after deducting the expenses of operation and 
maintenance and pay anything on a like amount of 
second mortgage bonds. Our fiscal year ends on the 31st 
of December. The statement published in the report of 
the Comptroller is made up to say the 1st of September, 
of the operation of the road for the previous twelve 
months, during all of which time it was in the hands of 
a receiver, under orders of the court, and until October 
30th — during the whole of the time, in fact. The report 
of the Comptroller shows that the amount received for the 
transportation of passengers was $1,349,041.01; from the 
transportation of freight, $3,005,448.43 ; for the transpor- 
tation of mails $163,625.15; for the transportation of ex- 
press business, $136,575.00; miscellaneous, $69,092.45 — 
total, $5,023,782.07. Then it shows that the amount paid 
out for conducting transportation, including repairs of 
station buildings in Texas, was $1,240,977.50; for motive 
power, including machine shops and water stations in 
Texas, $1,467,163.19; for maintenance of way in Texas, 
$777,397.19; for maintenance of cars, including repairs of 
car shops in Texas, $229,344.04; for general expenses, in- 
cluding taxes (taxes estimated), $217,236.24— total^ 
$3,932,148.16. Apply that to the $5,000,000 earned, and 


[54] 


what have yon got? It shows the measure of the earn- 
ings of the road just as well as if it had not been in the 
hands of a receiver. There are 5,000 men employed to 
conduct the business of the road. 

But I am astonished at the declaration of the gentle- 
man that the Texas & Pacific Railroad could be repro- 
duced for $10,000 per mile. It cannot be reproduced for 
$30,000 per mile and give it the rolling stock it has. 
Take any expert who is a thorough railroad man and an 
honest man and put him down to the figures, and he will 
show you that it cannot be reproduced for $30,000 per 
mile. I know whereof I speak; I have not dreamed 
through this thing, but have gone through it for days 
and nights and months and years. 

The distinguished gentleman says that the Texas & 
Pacific received from the Legislature of 1876 an extension 
of time in which to construct its line, and thereby saved 
its land grant. There was no extension of time in 1876, 
nor has there been any legislation by the State of Texas 
in favor of the Texas & Pacific since the adoption of the 
Constitution of 1876. Examine your statute books. Nor 
did the Texas & Pacific ever accept the provisions of the 
Constitution of 1876. Examine your State department. 
Therefore we can rely implicitly on the Act of 1853, un- 
less the gentleman can show that the Act of 1853 did not 
create a conti act with the railroads such as fixed vested 
rights. He says that in 1871 the Legislature left the 
Texas & Pacific to be controlled by such general laws as 
controlled other railroads. I did not exactly catch what 
the gentleman said about Poor’s Manual, stating that the 
Texas & Pacific gathered 7 per cent, from all freight car- 
ried, but it is not true that it gathered any such per 
cent. 

The earnings he speaks of, as to some of these roads, 
are what is left after paying for the maintenance of the 
roadway and the expense of operation, and do not include 


[55] 


interest upon a dollar of the bonds, nor dividends upon a 
dollar of the stocks. I was receiver of the Texas & 
Pacific Railway from December 16, 1885, up to the 30th 
of October, 1888, and every dollar outside of maintenance 
and operating expenses was consumed in the purchase 
and laying of steel rails, buying rolling stock and 
making other improvements, and the stockholders con- 
tributed over $2,300,000 to putting that road in safe con- 
dition, in addition to the earnings. 

I remarked just now that the earnings he reports the 
roads to have had, is gross and estimates nothing for the 
maintenance of roadway and for rolling stock nor for in- 
terest. He says that he does not take bonds into account 
at all. Why did your Legislature, years ago, authorize 
railroad companies to issue bonds to aid them in building 
their roads ? Yet, he does not want the roads to pay in- 
terest upon them. I infer that he wishes them repudi- 
ated. He says the bonds are watered. Watered how ? I 
never heard of watering bonds before. I have heard of 
watering stock , but I do not know r how you would go 
about watering a bond. 1 will be very frank with you ; 
I suppose that almost every railroad in Texas, and in 
every new country destitute to a large extent of popula- 
tion and wealth and industry, such as would give freight 
tonnage — 1 suppose the great majority of those roads 
were built by selling the bonds in the market for the 
highest price that could possibly be obtained for them. 
No sane man would pay. par for bonds to build roads 
through the plains, such as we found when we extended 
our road from Fort Worth to the Rio Grande. Not a man 
in America would pay par for such bonds. If Judge 
Terrell will negotiate a loan and furnish me a market for 
the bonds at par, I will agree to build a railroad to and 
through every county in the State of Texas ; but I will 
not agree to pay interest on the bonds or pay anything 
to the stockholders. 


[ 56 ] 


But the Legislature never complained of this fact, 
although it was as well known to them then as now. 
It was not concealed from the public. I conducted, in 
part, a negotiation for $12,000,000, to build our Rio 
Grande division from Fort vVArth to El Paso; and it was 
in all the newspapers what these bonds were rated at. 
Why did not the Legislature then say, you must not put 
bonds sold at a discount upon the country and expect to 
earn the interest out of your freights. Why did not the 
citizens make a complaint, if they considered that the 
basis for any wrong existed? If it had been done then, 
and it could have been shown that it was unlawful then, 
the bonds would have remained as waste paper. But 
you have allowed these bonds to be issued, sold in the 
market and are now held by innocent parties. My hon- 
orable friend knew then as well as he knows now, that 
these bonds were being sold at a heavy discount to build 
railroads. And they were sold, not to the men who 
were building the railroads, but to other parties who 
formed syndicates, built the roads and put the bonds 
on the market; and the bonds are held now, neither by 
the original promoters of the road nor the stockholders 
of the company. These are stubborn facts that you can 
learn in financial circles everywhere ; and what is there 
wrong in that? If the bonds had not been sold and the 
money realized, you would have been without these rail- 
ways to-day; although the distinguished gentleman 
says that trade is languishing, farms have been mort- 
gaged for more than they can be sold for, and every- 
thing is paralyzed. Everything is going where “ the 
woodbine twineth,” according to his statements, because 
of the railroads, when every intelligent man knows that 
but for the building of the railroads, Texas would not 
have had a million of population to day, instead of two 
and one-half millions. Instead of having taxable values 
such as you now have, your property would not have 


[57] 


been worth one- tenth as much as it is. Suppose you 
had gone into the market to borro v money upon lands 
before the Houston & Texas Central, Texas & Pacific and 
International & Great Northern were built. How much 
money could you have obtained upon an acre of land ? 
You can get $80 an acre now; could you have gotten $3 
an acre then ? Suppose you had put school lands in the 
west upon the market ; could you have gotten five cents 
an acre for them? Nobody wanted them. It is true the 
railroads derived a part of these lands as subsidies, but 
they enhanced the value of the school lands from five 
cents an acre to from $2 to $4 an acre. Not only that, 
but they sectionalized and surveyed the school lands, 
which were equal in acres to the subsidies, and paid the 
surveyors, and paid for filing the certificates and for all 
other work, and the State had these school lands located 
and sectionized without the cost of a dollar ; and it cost 
the railroad that I represent largely over $500,000 to do 
that work. Our surveying corps frequently had to have 
escorts to drive the indians from their path. It was an 
uninhabited and comparatively unknown country. We 
ran a line from Dallas to San Diego in 1872 and 1873, 
which costover $600,000 in cash ; and for a great 
part of our road in Western Texas we had to 
have an escort of cavalry. When the line was 
located permanently for constructionto El Paso, it 
was necessary to call on General Ord for a mounted 
squadron to protect, not only the engineers, but the men 
who were preparing the roadway for the superstructure. 
Railroad construction has driven the indians out of the 
country ; it has enhanced the value of your lands hun- 
dreds of millions of dollars, and yet everything, says 
Judge Terrell, “is languishing” because of the railroads. 
I prophecy that very soon the gentleman will imagine 
that the railroads bring all the thunderstorms, the 
cyclones, the grasshoppers, the plague, the yellow fever, 


[58] 


and every other evil that humanity is subject to. 

The gentleman talks a great deal about discrimi- 
nating rates. Where are these rates; these low 
rates he refers to out of Texas? They are made largely 
by water, a great many of them by sailing vessels and 
other means of water transportation. A great many of 
them bring iron in ballast. He says that we charge 
higher rates in Texas than are exacted in any other 
state in the Union. The gentleman is utterly and 
entirely mistaken. California charges more, and 
Nebraska charges more, and so does Mississippi and 
many other states which I cannot at this moment 
enumerate, charge a great deal more on domestic traffic 
than Texas; and I say, and challenge successful contra 
diction, that the local traffic does not represent 15 per 
cent, of the whole amount of traffic carried upon the rail- 
roads of Texas. There is no state in the Union as far 
from the manufactories as Texas that pays a lower rate 
upon its agricultural implements than Texas ; and 
no state has had a cheaper rate upon wheat going out. 
Your cotton is nearly all handled by foreign buyers or 
by eastern spinners and they get rates from here to 
Liverpool or to Palls Kiver, or to New York. The great 
bulk of your cotton is carried out by water lines from 
the port of New Orleans or from the port of Galveston. 

The gentleman says that the M. K. & T. road earned 
enough last year to pay 40 per cent. Forty per cent, on 
what ? Not on its bonds, certainly, for it could not 
pay anything on its bonds. 

And then he says that the reason we pay so much 
for coal is because Jay Gould owns the Indian Terri- 
tory coal mines, and that ‘‘accounts for the high price of 
coal paid by Gov. Brown.” I have been associated with 
Mr. Jay Gould in business for four or five years, and if 
he owns the coal mines in the Indian Territory I do not 
know it. My understanding is that the McAllister mines 


[59] 


belong largely to the M. K. & T. road; and the H. & T. 
C. road, which draws its coal principally from the Indian 
Territory, and in which company Jay Gould does not 
own one dollar of stock or bonds, pays just as much as 
we do and a little more. Nor do we draw all of our coal 
supply from that place. We get coal from Alabama; we 
get coal down the Mississippi river in barges; we get 
some from Port Smith by the ’Frisco line at Paris, and 
we get coal at Strawn. The coal has been bought at 
a very low price for Texas. The Texas & Pacilic is 
getting it as cheap as any corporation or individual in 
Texas. I know what the gas companies are paying and 
what the railroads are paying,and I say we paid out last 
year about $800,000 for coal, bought at the very lowest 
price at which coal could be brought into Texas from 
any source whatever. So that the fling made at my 
statement by the honorable gentleman falls to the 
ground. 

I said on Saturday and I repeat it, that everything 
in the nature of labor, everything in the nature of rail- 
road material, all rolling stock, all material that goes 
into the track, either originally or for repairs, costs more 
in Texas than it does in any section east of the Miss- 
issippi river. W e have to haul our rails long distances, 
either from Europe or from the mills one thousand miles 
north of us, and pay freight on them for that distance if 
we get them in America, aside from the insurance and 
all that. Tlie nature of your soil is such that it costs 
more to keep your roads in order than it does east of the 
Mississippi river on any line that I know of, except the 
Mississippi Valley road, which runs right down the 
Mississippi .valley. You cannot ballast a road in Texas 
for less than $2,000 a mile, with either stone or gravel, 
because of the scarcity of those materials and the long 
hauls. The ties do not last more than five years on 
your roads, while east of tlie Missippi river, in Alabama, 


[60] 


Tennessee, Kentucky or North Carolina, the ties will last 
seven or eight years. Bridge timbers are subject to the 
same criticism. Indeed everything that goes into the 
make-up of a railroad, either for original construction or 
for repairs and maintenance, costs from 25 to BO per cent, 
more in Texas than it does anywhere else. Do you know 
that there were rails taken out of the track of the Texas 
& Pacific last year, while I was receiver — iron rails 
substituted by steel rails — that cost $80 per ton at 
Galveston, besides the haul from Galveston; and we could 
not at that time by rail get within forty miles of the 
place at Jwhich they were to be laid and had to 
haul them upon ox-carts and wagons at an enormous 
cost. The roads built during that period paid $60, $80, and 
some as high as $100 per ton for their rails and corre- 
spondingly for all other material and engines and cars, 
and everything else were in the same ratio. I repeat 
that you cannot reproduce the Texas & Pacific, the 
Houston & Texas Central or the International & Great 
Northern — I do not know so much about the others — for 
$30,000 per mile; nor indeed do I believe it could be done 
for less than $40,000 per mile and furnish the same rolling 
stock. 

THE LEGAL AUTHORITIES. 

The decisions the Supreme Court of the United 
States in the various cases of the Georgia Railroad 
and Banking Company vs. Smith et al., Stone et al. 
vs. , the case from 

Mississippi, do not in' any sense weaken the arguments 
heretofore made in behalf of the railroad companies of 
Texas, nor is it an answer to our position that under the 
Constitution of Texas as it now exists the Legislature 
cannot delegate its power to a commission, or any other 
agency, to tix rates directly or indirectly by making 
classifications and supplying rates to those classifica- 
tions. In the case of the Georgia Railroad & Banking 


[61] 


Company vs. Smith etal., the Supreme Court of the State 
of Georgia had passed upon the constitutionality of the 
Commission bill and, under the well established rule of 
the Supreme Court of the United States, this adjudication 
of the Supreme Court cf the State of Georgia would not 
be disturbed unless in conflict with the Constitution of 
the United States. But of far greater importance than 
all this is the fact that the clause of the Constitution of 
Georgia, under which the Commission derived its right 
through the act of the Legislature, is a very different 
authoiity to the Legislature from that conferred by your 
constitution. The provision in the Constitution of Geor- 
gia is as follows : “ The power and authority of regula- 

ting railroad freights and passenger tariffs, 
preventing unjust discriminations and requir- 
ing reasonable and just rates of freight and 
passenger tariff, are hereby conferred on the 
General Assembly, whose duty it shall be to pass laws 
regulating freight and passenger tariffs and prohibiting 
unjust discrimination, and prohibiting said roads from 
charging other than just and reasonable rates.” This 
provision is permissive, while that of Texas is mandatory 
upon the Legislature to do the act itself. Section 2, Art. 
10 of the Constitution of Texas is as follows : “ The 

Legislature shall pass laws to correct abuses and pre- 
vent unj ust discrimination and extortion in the rates of 
freight and passenger tariffs on the different railroads in 
this State, and shall from lime to time pass laws estab 
lisliing reasonable maximum rates of charges for the 
transportation of passengers and freights on said rail- 
roads, and enforce such laws by adequate penalties.” It 
is obvious to any reflecting mind that the two provisions 
are very different. In your constitution the language is 
mandatory — that the Legislature shall pass laws to cor- 
rect abuses, and shall from time to time pass laws estab- 
ishing reasonable maximum rates of charges for the 


transportation of passengers and freights on said rail- 
roads. Now, how can that power be delegated to a dep- 
uty ? If it is mandatory upon the Legislature to do this 
thing from time to time , and if it is mandatory upon the 
Legislature to pass laws establishing reasonable maxi- 
mum rates, it is difficult to see by what power the Legis 
lature can delegate this authority to a forum unknown to 
the constitution and hitherto unknown to the laws of 
Texas. It would be a refusal on the part of the Legisla- 
ture to do for itself what the Constitution says it 
must do. 

In the Georgia constitution the language is : “The 
power and authority of regulating railroad freights, etc., 
are hereby conferred on the General Assembly,” and it 
may be said with reason and force that this authority 
implies the right to select the agencies for exercising 
that authority. In the Texas constitution it says: “ The 
Legislature shall pass laws.” In the first it merely 
authorizes; in the second it makes it mandatory. In the 
first, coupled with that power and authority, it is author- 
ized to require reasonable and just rates of freight and 
passenger traffic, while in the latter the constitution com- 
mands that the Legislature shall from time to time pass 
laws establishing reasonable maximum rates of charges 
for the transportation of freight and passengers. The 
Legislature, by your constitution, is not only required to 
pass laws from time to time establishing maximum 
rates, but to establish reasonable maximum rates- 
How can the Legislature determine whether the maxi- 
mum rates are reasonable or not if the power rests alone 
with a commission appointed by the Governor, which is 
amenable to the Legislature only in so far as the Legis- 
lature may have authority to annul their acts and turn 
them out of office. But while they are in office — and for 
two years, they may establish the most unreasonable 
rates conceivable, and rates that would bankrupt the 


[63] 


railroad properties of the State The Legislature must 
perform its office by passing a law, and at the same time 
passing one establishing reasonable maximum rates. If 
the constitution says the Legislature shall fix the rate of 
taxes on all property within the State of Texas, can any 
sane man insist that the Legislature can delegate that 
power to a commission of three men to be appointed by 
the Governor? These remarks apply to the other cases 
cited and to the constitutions of other States. 

If the promoters of the commission bills are right in 
their contention, then it follows as a necessary conse- 
qence that the Legislature has also the power to repeal 
the act of 1879 fixing maximum rates, and confer the 
power on a commission to fix the rates, maximum or less* 
And this would be a delegation of a power no less man- 
datory by the constitution to the Legislature than that 
part of the provision of the constitution already dis- 
cussed; indeed, it would be a delegation of the entire 
power conferred upon the Legislature which we think 
we have shown is mandatory as conferred by Section 2, 
of Article 10. It therefore follows that if the Legislature 
can delegate a part of the power conferred by the con- 
stitution, it can confer all of it, and if it has no authority 
to delegate the power to fix maximum rates then it 
equally follows that it cannot delegate any other power 
contained in that section and no one will pretend that the 
power to fix maximum rates can be delegated by the Leg- 
islature to anybody else. 

It may be added that there cannot be found in the 
Constitution of Texas authority to the Legislature either 
by itself or through any agency constituted for that pur- 
pose, to control railroads. The utmost limit of power 
that can be inferred from any part of the constitution is 
that it may in the mode and manner prescribed therein, 
regulate , but it can in no manner control. The difference 
between regulate and control , as it seems to us, is most 


[ 64 ] 


manifest. One mode of regulating is by fixing reasona 
ble maximum rates by direct act of the Legislature, but 
if a commission is appointed with powers contained in 
many of the bills now pending before this body, it would 
be giving to the commission the absolute control of rail- 
roads, and depriving the chosen officers, who are author- 
ized by the charters to be the officers in control of the 
property, of their right to exercise the functions con- 
ferred by the charter. The officers of a corporation 
as well as a corporation itself, are held to 
strict accountability for the proper conduct 
and management of the business of the line. They 
are responsible for damages to and losses of freight, re- 
quired to keep safe roadways, and the most approved 
machinery, good rolling stock, etc., but if you put a 
commission in control of this property, it paralyzes the 
arm of the officers constituted by the charter, and who 
are burdened by the responsibility of the law' in addition 
to do what they are required by law to do. 1 exicog- 
raphers define the w r ord “regulate” “ to modify, to adjust, 
to rule or establish a mode, to put in good order, to ad- 
just, methodize, arrange, direct, order” etc , whereas they 
define the word “control” to mean “ exercise restraint, 
influence , check , restrain , govern, power to rule, curb, 
etc.” Nowhere in the Constitution of Texas, either ex- 
pressly or by implication, can be found authority lodged 
in the Legislature to do more than regulate. It cannot 
be inferred from any provision in the constitution that 
the I egislature has the power to control, such as would 
be exerted through the influence of a commission, if any 
one of the commission bills we have seen be made a law. 

FURTHER AS TO THE DELEGATION OF LEGISLATIVE POWER. 

Judge Cooley, [in his excellent work on Constitu- 
tional Limitations says : 

“ One of the settled maxims in constitutional law, is 


that tli e power conferred on the Legislature to make 
laws can not be delegated to any other body or authority. 
Where the sovereign power of the State has located the 
authority there it must remain, and by the constitutional 
agency alone the law must be made until the constitu- 
tion itself is changed. The power to whose wisdom, 
judgment and patriotism, this high prerogative has been 
intrusted, can not relieve itself of the responsibility by 
choosing other agencies upon which the power shall be 
devolved, nor can it substitute the wisdom, judgment or 
patriotism of another body for those to which alone the 
people have seen fit to confide this sovereign trust.” 
Cooley’s Constitutional Limitations, 4th Ed., pp. 141. 
In support of this the authority quoted in a foot note 
from Locke on Civil Government section 142, is as fol- 
lows : “These are the bounds which the trust which is 
put in them by the society and the law of God and na- 
ture have set to the legislative power of every common- 
wealth, in all forms of Government : First, They are to 
govern by promulgated established laws not to be varied 
in particular cases, but to have one rule for rich and 
poor, for the favorite at Court and the countryman at 
the plough. Second, These laws also ought to be desig- 
nated for no other end ultimately, but the good of the peo- 
ple. Third, They must not raise taxes on the property 
of the people without the consent of the people given by 
themselves or their deputies. And this properly con- 
cerns only such governments where the legislative is 
always in being, or at least where the people have not 
reserved any part of the legislative to deputies to be 
from time to time chosen by themselves. Fourth, The 
legislative neither must nor can transfer the power of 
making laws to anybody else.” 

Judge Cooley cites a number of authorities in sup- 
port of the proposition that we have quoted, among 


[ 66 ] 


which is the case of the State vs. Hudson Co. Ave Com 
missioners, 37 N. J. Law Reps. 

The court held that “ the Legislature cannot leave it 
to a Board of Commissioners to say what proportion of 
expense of laying out and opening a public avenue shall 
be imposed on the township of a county or wards of a 
city, and holding that the act of taxation itself, by the 
Legislature, must distribute the burden and prescribe the 
standard by which distribution is to be made.” The 
manner of laying out the avenue or avenues is regulated 
principally by Sec. 11 of the act of the Legislature passed 
in April 1873, and is as follows : “ That the money to 

pay the entire cost of laying out and opening the said 
avenue shall be raised by assessing the same upon all 
lands lying within two thousand feet of the center line of 
said avenue, and in such proportion upon such piece and 
parcel of land as in the opinion of the commissioners of 
assessment shall be equal to the benefit received, and 
that the money necessary to pay the entire cost and ex- 
pense of executing this act shall be borne by the public 
at large of the county of Hudson, etc.” And the court 
in delivering the opinion says : ‘'But from what I have 
said I think it must be on careful consideration conceded 
that a power unchecked except by the obligation of fair- 
ness and reasonable discretion, is vested in this body of 
persons to distribute this tax according to its judgment 
of what is right and just among the various townships in 
this county. Holding this opinion, it seems to me neces- 
sarily to result that this act cannot be enforced. The 
reason of this conclusion is that the Legislature has 
transferred to these commissioners a part of the law- 
making power. A legislative act of taxation, in order to 
be legal or effectual, must consist of something more 
than a mere declaration that a certain sum of money 
shall be raised out of the property within the county. 
Itself must distribute the burden. This is as essential as 


[ 67 ] 

the designation of the amount to be raised. And not 
only the sum required must be stated and the property 
out ot which it is to be made designated, but also some 
certain standard of assessment must be established. No 
act ol taxation can omit any of these components If 
the Legislature of this State should ordain that a tax of 
a certain amount should be levied to be distributed 
among the counties of the State in such proportion as the 
treasurer in his discretion should direct, it would not 
probably be denied by anyone that such an act would be 
entirely inoperative. The act in question is of this char- 
acter, and is therefore so clearly imperfect as an act of 
taxation that it must be judicially regarded as a nul- 
lity.” 

We apprehend no authority can be found in the con- 
stitution of Texas for the levy of taxes to pay the ex- 
pense of a railway commission. Your constitution 
enumerates the subject and objects for which taxes may 
be levied, and it is a long and full list, but we believe you 
will fail to find any general authority that would include 
the expense of a railway commission, and certainly there 
is no express authority, and the rule is held as the law 
itself that the expression of one is held to be the exclu- 
sion of all others, and would seem to apply here. What 
the expense of a commission may be is a matter of no 
consequence so far as this proposition is concerned 
whether it would be a thousand or a hundred thousand 
dollars. 

In a case from Ohio, cited by Judge Cooley, and 
which is reported in 1 Ohio State Rep., Cook, Railroad 
Company vs. Commissioners Clinton County, the court 
held: “ The General Assembly, like the other depart- 
ments of government, exercises only delegated authortiy, 
and any act passed by it not falling fairly within the 
scope of legislative authority, is as clearly void as 
though expressly prohibited. The power of the General 


[ 68 ] 


Assembly to pass laws cannot be delegated by them to 
any other body or to the people.” 

Tlier^ is a leading case in one of the earlier Tennessee 
reports, to which we have not access, where the court 
held that under the Constitution of ’96, which authorized 
and made it the duty of the Legislature to levy and col- 
lect taxes for the State and counties, the Legislature sub- 
sequently attempted to delegate the power to levy and 
collect taxes for the counties. The court held that the 
legislative act of delegation was absolutely null and void. 
That duty was mandatory upon the Legislature itself and 
could not be delegated. The result of this was that the 
Constitution of lc 34 authorized the county courts to levy 
taxes for the revenue of the county, each for itself. 
Scores of other cases could be cited just as strong, but 
time will not now permit. 

VESTED RIGHTS — EITHER BY CHARTER OR LEGISLATURE. 

In the case of the Georgia Railroad and Banking 
Company vs. Smith et al., there is nothing in the opin- 
ion of the court or in the facts of that case that militates 
at all with the position heretofore taken upon the effect 
of the act of 1858. The provision in the charter of the 
Georgia Railroad and Banking Company which was 
under discussion is: “The said company shall at all 
times have the exclusive right of transportation or con- 
veyance of persons, etc., provided that the charge of 
transportation or conveyance shall not exceed 50 cents 
per 100 pounds on heavy articles, 10 cents per cubic foot 
for articles of measurment for every 100 miles, and 5 
cents per mile for every, passenger, etc.” This case has 
certainly gone to the very verge of what might seem to 
be a divesture of vested rights, but you must not over- 
look the fact that the term for which the charter was 
granted had expired before this litigation had com- 
menced and the court could have contented itself by say- 


[69] 


ing that whenever the charter right expired, the right to 
hx rates and tolls expired, but the court says, “In almost 
every case which has been before this court, where the 
power of the State to regulate the rates of charges of 
railroad companies for the transportation of persons and 
freight within its jurisdiction has been under considera" 
tion, the question discussed has not been the original 
power of the State over the subject, but whether that 
power had not been b}^ stipulation of the charter or 
other legislation amounting to a contract, surrendered to 
the company, or been in some manner qualified. It is 
only upon the latter point that there have been differ- 
ences of opinion.” The court then proceeding further, 
says; “The question then arises whether there is, in the 
12th section of the charter of the plaintiff in error, a con- 
tract that it may make any charges within the limits 
there designated.” The learned judge who delivered the 
opinion then remarks “that when that charter was 
framed the provision was made that anyone could run 
cars upon it upon the payment of established tolls,” but 
further says that “this notion has long since been 
abandoned as impracticable,” and cites Railroad Com- 
pany vs. U. S. 93, U. S. 442. The same section grants to 
the company the exclusive right of transportation of 
persons and merchandise over its road, a right which, 
in another part of the act, is limited to thirty-six years 
and then expires, unless renewed by the Lagislature up- 
on such terms as may be prescribed by law and ac- 
cepted by the company, and the court remarks that this 
period has long since expired and no explanation ap- 
pears on the record that any renewal of the privilege 
has been granted. The court further remarks: “It would 
require much clearer language than this to justify us in 
holding that, notwithstanding altered conditions of the 
country in the future, the Legislature had (in 1833) con- 
tracted that the company might, for all time charge 


[70] 


rates for transportation of persons and property over 
its line up to the limits there designated.” Tne court 
further states: “It is conceded that a railroad 
corporation is a private corporation, though its 
uses are public, and a contract embodied in 
terms in its provisions or necessarily implied 
by them, is within the constitutional clause prohibiting 
legislation impairing the obligation of contracts.” 

Now compare this language embraced in the charter of 
the Georgia Railroad Company, with the language con- 
tained in the 15th section of the Act of February 7th, 1853. 
Sec. 15: “It shall be lawful for the Legislature, at any 
time, to prescribe the rates to be charged for the trans- 
portation of persons and property upon any such roads, 
should they be deemed too high, and may exercise the 
same power every [ten years , provided, that no reduction 
shall be made unless the net profits of the company for the 
previous ten years, shall amount to a sum equal to twelve 
per centum per annum, upon its capital stock and then 
so as not to reduce future probable profits below the said 
per centum.” The language in this is not doubtful. It 
is susceptible of but one interpretation. It does not 
provide that any of these companies shall in all time to 
come, be allowed to charge rates at their will, not to 
exceed a* certain maximum, but simply provides that the 
Legislature shall establish rates from time to time, if the 
rates in use by the companies are too high, but that no 
reduction shall be made in the rates of the railroad com- 
panies until the net profits of the t companies for the 
previous ten years have amounted to the sum of 12 per 
centum per annum upon its capital stock and then so as 
not to reduce future probable profits below the said per 
centum per annum. All the terms of the contract appear 
in this language and all the powers of the Legislature as 
well as the rates of the railroad corporations. And cer- 
tainly, if you should be satisfied that this act had the 


[71] 


same effect as an amendment to the charter, you can have 
no difficulty in determining that it is not in the cate- 
gory of any of the cases cited in reply to it. It matters 
not whether you consider it in the light of an amend- 
ment to the charter or whether you consider it a right 
that cannot he taken away by the Legislature except on 
the terms and provisions expressed; that makes no 
practical difference. And that rights have been conferred 
by special as well as general laws which have been held 
by the supreme court to be inviolate and not susceptible 
of being broken by the Legislature of the state, can be 
demonstrated by numberless cases. A few may be cited : 

In the case above referred to, of the Georgia Rail- 
road & Banking Company, Justice Field, in delivering 
the opinion of the Court says “but whether that power 
had been by stipulations of the charter, or othcn legisla- 
tion amounting to a contract , surrendered to the company, 
or been in some manner qualified.” This opinion clearly 
implies that the power may be given by stipulation of 
the charter or other legislation amounting to a contract 
and further that power can be conferred by legislation 
amounting to a contract by which the sovereign power 
of the state surrenders to the company the right to pre- 
scribe rates before the passage of such act, and that 
such a contract is irrevocable so long as it is executed in 
good faith. 

In further support of the proposition that irrevoca- 
ble rights can be acquired by corporations under gen- 
eral or special laws, we beg to cite the case of Gor 
don against the Appeal Tax Court, third Howard, U. S. 
Reports page 133. The Court held in that case that the 
Legislature of Maryland, by an act passed, exempted 
both the old and new companies from taxes either of 
capital, property or stock, on condition that the com- 
panies would except the legislation and pay a yearly 
stipulated sum during the continuation of their charters. 


[72] 


Held that this act was a contract between the State and 
the Banks, when the Banks accepted it and that the tax 
levied on the stock in addition to this was illegal, and 
in violation of the contract made with the Banks through 
the aforesaid act of the Legislature. In the case of 
Branch State Bank of Ohio, vs. Miami Co., 16th Howard 
page 369, the Court says : “ The Legislature of the 

State if not restrained by its Constitution may make a 
valid and binding contract.” The general banking act 
of Ohio, was not merely declatory of the intent and pur 
pose of the Legislature, but amounted to a contract. 
This case further also discussed public and private cor- 
porations in their relations to the State, styling a municipal 
corporation as a public one and banks and the like, where 
private capital was invested, as private corporations and 
Held that the Legislature can control the former class at 
will, while the latter are protected by legislative contract 
from adverse legislation. 

We cite also case of Bridge Proprietors vs. Hoboken 
Co. 1st, Wallace page 116, in support of the same pro- 
position, that the Statute of the State may create a con- 
tract which confers irrevocable rights. 

Some cases have been cited in other discussions, 
alleged to be in conflict. Reference to one or two of 
them will suffice. 

Tilly vs. The Savannah, Florida & Western Rail- 
way Company and others, decided by Judge Wood, on 
the Circuit. There is no principle enunciated in that 
case that militates with our position. The Savanah, 
Florida & Western Railroad Company, was made up of 
several corporations, consolidated, according to law, un 
der the act of the Legislature of Georgia, approved 
April 16, 1868. 

When the act under which the consolidation was made 
and under which this new corporation was organized, sec- 


[73] 


tions 1651,1682 of the code, 1863, which took effect J*n. 1, 
1868, were in force; the lirst of these sections provides : 
u Persons nre either natural or artificial : The latter are 
creatures of the law and except so far as the law forbids, 
subject to be changed, modified or destroyed at the 
will of their creator.” The second section declares *• In 
all cases of private charters heretofore granted, the State 
reserves the right to withdraw the franchise, unless the 
right is expressl} 7 negatived in the charter.” And the 
Court then remarks: “ From this section of the Code it 
is apparent that the right, privilege and franchise of the 
Atlantic & Gulf Railway Company, were subject to 
alteration, amendment or withdrawal, at the will of the 
Legislature.” And the Couit ha 1 before that time, held 
that the consolidation, under the act of Apiil 1863, of 
the Savannah, Florida & Western Railway Company, 
and the Atlantic & Gulf Railroad Company, said com- 
panies were dissolved and a new corporation was created 
and that the new corporation became subject to the pro- 
visions of the Code above cited, and the Court fun her 
recognized the fact that it had been expressly decided 
by the Supreme Court of Geoigia, that all charters 
granted by the State since the adoption of the Code of 
1863 are subject to the provisions of the Code. Thus 
in the case of the West End Railway Company, vs. 
Atlanta 49 Ga. 151, the Judge remarks “ It must there- 
fore be considered as conclusively settled, that the right 
of the Atlantic & Gulf Railroad Company to establish 
its own schedule of freight and fares within certain lim- 
its, was subject to legislative modification and control, 
and that the Savannah, Florida & Western Railroad 
Company, having succeeded the rights and franchises of 
the Atlantic & Gulf Company, is subject to the same 
revisory power,” and further remarks, that the case is 
still further settled by section 8, of the act under which 
the company was organized, declaring that nothing in 


this act shall operate to limit the power of the Legisla- 
ture to alter, modify or withdraw the charter or franchi- 
ses herein expressed. The only thine: t lien, that the 
Court holds, is the power of the Legislature to create 
a commission, and the same remark make in relation to 
the Georgia Railway Company and the Mississippi case, 
will apply to this. 

I thank you gentlemen for your patient attention, 
I hold myself in readiness to support every word I have : 
uttered if called in question. I trust you will reach 
your conclusion under the sanction of your solemn ob* 
ligations, inspired by a sense of duty to act fairly with 
all interests, in such manner as to reflect credit on your 
great State, and multiply her prosperity a thousand 
times. 



















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